U.S.-based employers announced plans to reduce their payrolls by 45,107 in January -- up nearly 50% from the month before.
Outplacement consultancy Challenger, Gray & Christmas, which tracks labor developments, says the increase follows the eliminated of 30,623 positions -- the lowest one-month total since 17,241 cuts were announced in June 2000.
Most of the downsizing occurred in retail, where poor earnings led to a wave of job cut announcements from several national chains, including Macy’s, Sam’s Club, JC Penney, Sears, Best Buy and Target. Overall, retailers cut 11,394 job cuts in January -- up 71% from the 6,676 retail cuts tracked in January 2013. It was the heaviest for the sector since last March, when 16,445 positions were eliminated.
Weaker holiday sales blamed
“Holiday sales gains were relatively weak and many retailers achieved the gains by slashing prices on their products, which adversely impacted their year-end earnings,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas. “The post-holiday job-letting in the sector was inevitable.”
Challenger believes this is only the beginning. “Starting in January, retailers started shedding the tens of thousands of temporary seasonal workers hired to help handle the holiday rush,” he pointed out. “The announced job cuts, on the other hand, will impact full-time, permanent workers in the stores and at the corporate offices of these struggling chains.”
J.C. Penney Co., for example, announced that it would be cutting 2,000 workers from its payrolls as it closes 33 stores. Meanwhile, reports indicate that Macy’s will rely on a combination of store closings, job cuts among front-end store personnel, as well as a reduction in some merchandise planning positions and central office roles to reduce its headcount by 2,500 jobs.
Not every sector announcing job cuts is struggling. Several significant job-cut announcements came from companies in the technology sector. The computer industry ranked second among January job cutters, announcing plans to eliminate 6,456 positions during the month -- up 146% from a year earlier when firms announced 2,626 job cuts.
“Perhaps the most notable cuts in the tech sector came from Intel and EMC Corp..” said Challenger. “In both cases, the cuts were due to shifts in business strategies. In these situations, it is not uncommon for job cuts to occur in one area while hiring occurs in another. In fact, EMC indicated in its announcement that it expects to end 2014 with the same number of employees it had to begin the year.”
The financial sector, which finished 2013 as the top job-cutting sector of the year with 60,962, started 2014 as the third largest. Employers in financial services reported 4,817 planned terminations in January -- down 44% from the 8,578 financial job cuts these firms announced to begin 2013.
Challenger wars that this could be another year of significant downsizing in the banking industry. While the housing market is bouncing back, many banks had ballooned their staffing in mortgage lending area to deal with foreclosures and troubled assets,” he noted. “As the number of foreclosures, refinancings, and troubled mortgages continue to decline, so will the need for these extra workers. The remaining mortgage bankers should be busy with increased home lending, but right now the staffs are larger than demand warrants.”
Initial jobless claims
Separately, fewer workers found themselves in the unemployment line last week.
The government reports 331,000 people filed first-time claims for jobless benefits during the week ending February 1 -- a drop of 20,000 from the week before. Economists surveyed by Briefing.com were calling for a total of 335,000 filings.
Analysts say the upward spike to 351,000 the week before was likely due to the extreme cold experience in many areas of the country.
The 4-week moving average, which is less volatile than the weekly number and, thus considered a more reliable indicator of the labor market, rose 250 -- to 334,000.
The complete report is available on the Labor Department website.
U.S.-based employers announced plans to reduce their payrolls by 45,107 in January -- up nearly 50% from the month before. Outplacement consultancy Challe...