Bloomberg News

Announced U.S. Job Cuts Rise 11% From Year Ago, Challenger Says

May 03, 2012

Employers in the U.S. announced more job cuts in April than a year earlier, led by education and government agencies.

Planned firings rose 11 percent to 40,559 from April 2011, according to figures released today by Chicago-based Challenger, Gray & Christmas Inc. The monthly average of 45,913 cuts through the first four months of this year is lower than the full-year average of 50,507 for 2011.

Employers in education, government, and the consumer goods and transportation industries are easing the pace of dismissals even as they continue to trim headcount, the report said. Job creation in the world’s largest economy is yet to reach a level that will make a “substantial dent” in joblessness, it said.

“We do not foresee a sudden upsurge in downsizing activity,” John A. Challenger, chief executive officer of Challenger, Gray & Christmas, said in a statement. “The monthly totals remain well below levels that would signal a reversal in the recovery.” At the same time, demand for goods and services isn’t enough that it “warrants accelerated hiring,” he said.

Compared with March, job-cut announcements were up 7.1 percent. Because the figures aren’t adjusted for seasonal effects, economists prefer to focus on year-over-year changes rather than monthly numbers.

Educational institutions led firings with 9,027 planned cuts in April, followed by 3,100 in government. Even so, the pace of reductions in education so far this year is down 32 percent compared with the same time in 2011, and 83 percent lower at government agencies.

Consumer Goods

Firings have waned since February at consumer goods firms - - the biggest job-cutters this year -- and at transportation companies, the latest data showed.

Michigan led all states with 5,094 announced job cuts last month, followed by California with 4,070. Washington state had 3,329 reductions and Pennsylvania had 3,292.

The report also showed that employers announced plans to take on 11,794 workers in April compared with 12,390 the prior month.

The Labor Department tomorrow may report tomorrow that payrolls climbed by about 160,000 workers last month after a 120,000 increase in March, according to the median forecast of economists surveyed by Bloomberg News. The unemployment rate probably held at 8.2 percent.

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 jobs 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.

To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net


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