Bloomberg News

Announced U.S. Job Cuts Drop 4.3% From Year Ago, Challenger Says

June 01, 2011

June 1 (Bloomberg) -- Employers in the U.S. announced fewer job cuts in May than a year earlier, signaling the labor market is improving.

Planned firings dropped 4.3 percent to 37,135 last month from May 2010, according to figures released today by Chicago- based Challenger, Gray & Christmas Inc. Government and nonprofit agencies had the most cutbacks.

Announced job reductions in the first five months of 2011 were down 21 percent from the year-earlier period, consistent with other data that indicate the economic expansion is prompting companies to retain staff. A report this week will show the world’s largest economy added jobs for the eighth consecutive month, according to a Bloomberg News survey.

“It is unlikely that we will see a sudden resurgence in corporate downsizing in the months ahead unless there is a major shock to the economy,” John A. Challenger, chief executive officer of Challenger, Gray & Christmas, said in a statement. While there are recent “signs of weakness” that include slower manufacturing and a struggling housing market, the report suggests “employers do not see these as long-term problems,” he said.

Compared with April, job-cut announcements rose 1.8 percent. Because the figures aren’t adjusted for seasonal effects, economists prefer to focus on year-over-year changes rather than monthly numbers.

Government and nonprofit entities led the firings with 14,755 announcements in May. The cutbacks are bleeding into the private sector, reflected in a “mini-surge” in firings in aerospace and defense, the report said. Cuts of 5,778 in May brought that industry’s reduction to 17,570 in the first five months, compared with 19,150 firings for all of 2010.

California led all states with 5,174 announced job cuts in May, while Louisiana had the next-largest reductions, at 4,600.

Hiring Cools

Hiring cooled in May, the report showed. Employers announced plans to take on 10,248 workers, down from the prior month’s 59,648 figure that mainly reflected McDonald’s Corp.’s plan to add 50,000 employees, according to Challenger.

A report from the Labor Department on June 3 may show payrolls climbed by 180,000 last month, while the unemployment rate fell to 8.9 percent from 9 percent, according to the median forecast in a Bloomberg News survey of economists. Private companies added 210,000 jobs after a 268,000 gain the prior month, economists predicted.

Challenger’s data do not always correlate with figures on payrolls or first-time jobless claims as reported by the government. Many job cuts are carried out through attrition or early retirement. Some employees whose job are eliminated find work elsewhere in their companies and many announced staff reductions never take place because business improves. The totals also include foreign affiliates.

--Editors: Vince Golle, Carlos Torres

To contact the reporter on this story: Shobhana Chandra in Washington at

To contact the editor responsible for this story: Christopher Wellisz at

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