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US job cuts fall in May

June 4, 2009 12:20 IST

US job cuts fall in May

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Yoshita Singh in Chicago

Job cuts announced by US employers fell for the fourth consecutive month in May to over 1,10,000, recording a 16 per cent dip from layoffs announced in April, but the decline could be shortlived as downsizing may pick up pace after the summer months, a report has said.

US employers announced 111,182 planned job cuts in May as compared to 132,590 layoffs in April. While May marked the fourth consecutive decline in monthly job-cut announcements, the layoffs were 7.4 per cent higher than the same month a year ago.

Text: PTI


Image: Chrysler auto assembly workers rally to save their jobs and protest plant closings in front of the Sterling Heights Assembly plant in Sterling Heights, Michigan.
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So far this year, employers have announced 82 2,282 job cuts, more than double (109 per cent) the 394,193 announced through this point last year, global outplacement consultancy firm Challenger, Gray & Christmas said in its monthly job cuts report on Wednesday.

Since reaching a peak of 241,749 in January, job-cut totals have fallen by an average of 17.5 per cent per month.

But the firm predicted that job cuts may pick up pace again by the third quarter of this year and the decline in job cuts could be short-lived.


Image: US President Barack Obama speaks about the auto industry in the Grand Foyer of the White House.
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"The second quarter is typically the lowest quarter of the year when it comes to job cuts. Corporate downsizing may continue to remain slow during the summer months, but if the past is any indication, we could see the pace accelerate again in the latter half of the third quarter through the end of the year," Challenger, Gray & Christmas chief executive, John Challenger said.

The report predicted that the heaviest downsizing in the coming months could come from state and local governments, which are struggling against deficits created by shrinking tax revenue.

The number of cities and states operating in the red are growing at a significant rate. As a result, the government and non-profit sector was the leading job-cut sector in May with 22,317 announced job cuts, it said.


Image: Flags wave behind a General Motors Corp sign in downtown in Detroit.
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This sector was followed by the computer industry, which announced 15,384 job cuts in May.

"We may see more job cuts from the computer and other sectors related to technology, as corporate America and consumers keep spending in check," the report said.

Painting a grim picture for the country's struggling auto sector, it said the car industry would continue to see heavy job cutting in the months to come.

The automotive industry has announced 111,614 job cuts so far this year. With General Motors declaring bankruptcy, the process of job cuts would be accelerated to achieve cost-savings objectives sooner than later.


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"Chrysler is hanging on by a thread and Ford, the strongest of the Big Three, experienced a 31 per cent annual decline in April sales," said Challenger.

"While the automakers expect a rebound in the second half of the year, we could continue to see heavy job cuts in the sector, as low output across the board trickles down through the supplier chain," he added.

The report excludes the job-cut figures in the auto sector resulting from dealership closures since the number of jobs affected has not been confirmed.


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As in the previous months, economic conditions and cost-cutting demand downturn, and closing were the main reasons cited by companies to layoff employees.

The pace of hiring by companies was slow in May with the industrial goods sector hiring for 1,943 jobs, followed by health care/products (1,525), telecommunications (1,200), financial (1,182) and energy sector (569).


Image: A street sign is seen in front of the New York Stock Exchange on Wall Street in New York.
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