Planned job cuts in January rose to five-month high

Data from Challenger, Gray & Christmas Inc. Job-cut announcement report.

by Anjana Sundaram
February 23, 2010

Planned job cuts rose to a five-month high in January, according to outplacement firm Challenger, Gray & Christmas Inc. Employers surveyed by the Chicago firm announced plans to reduce headcount by 71,482 in January with retail and telecommunications sectors downsizing the most.

The layoff total in January marked a dramatic shift, spiking 59 percent higher than December. January’s figure was the largest monthly layoff total since August. The three main reasons for job cuts reported to Challenger were restructuring, cost-cutting and economic conditions.

“The increase in January is not necessarily a sign of a recession relapse. It is not uncommon to see a surge in job-cut announcements to begin the year,” said CEO John A. Challenger in a press release.

The silver lining is that the planned job cuts in January have actually declined 70 percent compared with the same month last year. The decline in job-cut totals this month was led by a decrease in losses from the retail sector.

“We are certainly starting 2010 on better footing than a year ago. The fact that January job cuts did not exceed 100,000 bodes well for much lighter downsizing this year,” Challenger said.

Richard Kaye, an economist at the Illinois Department of Employment Security, thinks the trends in Chicago employment may not necessarily follow the same patterns indicated in the report.  “That [Challenger report] mainly concerns large-scale job cuts. Employment in Chicago is characterized by a slow attrition. I don’t expect the attrition to worsen, but I do expect it to continue,” Kaye said.

Kaye also noted that while the report states telecommunications was one of the hardest hit sectors, Chicago has been more severely impacted by job losses in the manufacturing and construction sectors. In fact, according to a national employment report released Wednesday by ADP, the payroll processing company, construction employment dropped 37,000, marking the third straight year of monthly construction employment declines.

The Challenger report projects that layoffs will slow in spring and summer. “Many human resources professionals will be turning their focus from the workforce reduction strategies of a year ago towards workforce retention strategies,” Challenger said. 

The top two industries hiring for January are entertainment and government. The entertainment and leisure sector plans to fill 13,425 jobs, whereas the government and non-profit sector has 10,000 job openings.

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