The new year came in like a lion, as record downsizing in the retail sector helped push the number of planned job cuts announced in January to 241,749. That is the largest monthly total since January 2002, when job cuts reached an all-time high of 248,475, according to a report released by global outplacement consultancy Challenger, Gray & Christmas, Inc.
The January job-cut total was 45 percent higher than the 166,348 cuts announced in December and 222 percent higher than a year ago, when employers announced 74,986 job cuts to begin the year.
Last month ranks as the second largest January on record and the fourth largest job-cut month since Challenger began its tracking in 1993.
Historically, January is the heaviest downsizing month. It has been the largest job-cut month of the year seven times between 1993 and 2008. During that period, January job cuts averaged 98,053, 10 percent higher than the 88,892 averaged in October, the next heaviest job-cut month.
The January surge was due in large part to significant reductions in the retail sector, which is coming off its worst holiday sales season in decades. Retailers announced 53,968 job cuts in January, a record number for the industry and one of the largest one-month job-cut totals for any industry.
January retail firings surpassed the 2007 year-end total for this sector (51,036) by nearly 3,000 job cuts. Meanwhile, cuts in this industry are less than 28,000 away from surpassing the 2008 year-end total of 81,621.
The second-ranked industrial goods sector announced 32,083 job cuts last month, followed by computer (22,330), pharmaceutical (22,063), and aerospace/defense (17,800).
"The variety of industries represented among the top five job-cutting sectors in January is further evidence of how far the impact of this recession has spread," said John A. Challenger, chief executive officer of Challenger, Gray & Christmas. "Industries that at first appeared to be immune to downturns, such as computer and pharmaceutical are now rapidly shedding workers."
Challenger notes that even if the stimulus package is successful, it could take months to make a noticeable impact on the employment picture.
"If there is any bright spot in the latest job-cut data, it is the fact that financial firms announced only 1,458 job cuts in January," he added. "That is the lowest one-month total for that industry since 2005. Whether that is a sign of lower job cuts to come or simply a fluke remains to be seen," said Challenger.