What seems to be a growing reluctance to announce firings during the holidays, along with a stronger economy, helped December experience the lowest number of monthly job cuts in more than 15 years.
Outplacement consultancy Challenger, Gray & Christmas reports U.S.-based employers announced planned workforce reductions totaling just 23,622 last month, down 24% from November and 28% below the 32,640 terminations announced in December 2014.
Not only was December the lowest job-cut month of 2015, it was the lowest job-cut month since June 2000. Last month also represents the lowest December job-cut total since Challenger began its monthly tracking in 1993.
The December decline was significant enough to prevent 2015 job cuts from reaching a six-year high. In all, employers announced that they had sacked 598,510 people during the year, up 24% from 2014.
“It used to be that companies would not hesitate to announce job cuts around the holidays,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas. “In fact, the heaviest job-cut period of the year was often in the closing months. However, that appears to have changed in the wake of the Great Recession.”
A change in the trend?
While 2015 total still saw the heaviest downsizing activity since 2011, the year definitely ended with job cuts on the decline. Employers handed out 105,072 pink slips in the fourth quarter, about half as many as in the previous quarter. The fourth quarter total down 12% from the same quarter in 2014.
The 105,072 job cuts announced in the final three months of 2015 represents the lowest quarterly total since the third quarter of 2012.
According to Challenger data, the average December job cut total from 2009 through 2015 was 34,046. That's 37% lower than an overall monthly average of 53,835 recorded during that period.
“Companies are more cognizant than ever of their public image, particularly in the era of social media,” said Challenger. “It’s not that job cuts are entirely off limits, but the numbers suggest that employers may be more reluctant to announce large-scale layoffs around the holidays. It could also be that, as more companies measure and revise goals and objectives quarter-to-quarter, the importance of making strategic moves at the end of the year has diminished.”
The impact of lower oil prices
Workers in the energy sector, as well as those in sectors peripherally related to the exploration and extraction of oil, were hit hard by falling oil prices. Of the 287,672 job cuts announced in the first six months of 2015, 69,582 or nearly 25%, were blamed on oil prices.
The pace of oil-related job cuts eased in the second half of the year, but they still represented 11% of the 310,838 job cuts announced from July through December.
Due in large part to the drop in oil prices, the energy sector saw the heaviest job cutting in 2015, ending the year with 94,409 announced firings -- nearly seven times more than the 14,262 job cuts announced in the industry in 2014.
Large-scale cut backs in the military contributed to a 211% increase in government-sector job cuts. The majority of the 70,029 job cuts reported by government agencies in 2015 occurred in July, when the U.S. Army announced plans to cut 57,000 troops and civilian personnel from its ranks.
In addition to the energy and government sectors, the retail, computer, and industrial goods sectors also saw increased job cuts in 2015.
Still, Challenger says the overall outlook for the economy remains positive.
“This does not necessarily mean fewer job cuts, though,” he warned. “We are at a point in this economic expansion where we could see a lot volatility as companies make strategic moves to make the most of growth opportunities. That could mean more mergers, more leadership changes and more movement of resources from weak business lines to those with more promise. All of these actions could potentially result in workforce adjustments in 2016 and beyond."
“The good news for those impacted by downsizing is that all of this churn should also result in good employment opportunities,” he concluded. “Those with the right skills and experience should land quickly, particularly if they employ an aggressive job search strategy.”