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Planned Job Cuts Drop 41%, Report Shows

March 4, 2010 — Monthly job cuts fell in February to the lowest level since 2006, as companies announced plans to reduce payrolls by only 42,090, according to a recent report.

The job-cut report by Challenger, Gray & Christmas Inc. found that the February total was down 41% from January’s 71,482 announced job cuts. It was 77% lower than the 186,350 job cuts announced in February 2009, when the economy was still in the midst of the housing and financial markets collapse.

According to the report, downsizing activity peaked in January 2009, with employers announcing 241,749 job cuts, the highest monthly total in seven years. Since then, monthly job cuts have steadily declined, with only a couple of exceptions. Last month’s total marks a new low-point for this downward trend. It is, in fact, the lowest monthly total since June 2006, when employers announced just 37,178 job cuts. 

The report shows that through the first two months of 2010, employers announced 113,572 planned layoffs — 73% below the pace established in the first two months of 2009, when 428,099 job cuts were announced.

“Most economists agree that a recovery is well underway; a position that appears to be supported by declining job-cut activity. It may be a couple of more months before hiring begins to surge, but it is clear that employers have shifted away from downsizing and are poised to start adding workers,” said John A. Challenger, CEO of Challenger, Gray & Christmas.

The report compares hiring rates from last year and found that in the first two months of 2009, retailers announced 72,727 planned job cuts. So far this year, retail job cuts are down 75% to 18,271. By this point last year, automotive companies had already announced 70,058 job cuts. As of last month, these firms have planned just 7,334 cuts — a 90% drop.

The leading job-cut industry early in 2010 is the pharmaceutical sector, which has announced 25,857 job cuts, including 17,687 in February, the report shows. This two-month total is down slightly from the same period a year ago, when these firms announced 30,869 job cuts.

Drop in Cuts for Top Downsizing Sectors in January, February 2009

“We are seeing more job cuts related to business strategy, as opposed to cuts stemming from recessionary pressure. In other words, we expect more cuts from mergers and acquisitions or from companies shifting focus from one business area to another,” Challenger said. “Make no mistake, many are still struggling, but there is an overall sense that we have turned a corner. With downsizing showing dramatic signs of stabilization, chances are good that increased job creation is approaching.”

Month-By-Month Job Cuts

Top Five Job-Cut Industries
February

Top Five Job-Cut States
February

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