July 7, 2003,
Layoffs down for second straight month, to 31-month low
Providing critical support for consumer confidence and spending going forward, planned job cuts in June declined for a second straight month to a level of 59,715, the lowest figure in almost three years, since 44,152 layoffs were announced in November 2000.
"The decline in job cuts is, of course, good news for workers who might begin to sleep a little easier at night," said John Challenger, ceo. "However, it does not necessarily mean an immediate rebound for the millions of people who remain jobless."
To the contrary, he added, "The slowdown in job cuts may actually bring a slowdown in hiring. Evidence of the slowdown in hiring can be found in announced government figures in May that showed 1,930,000 unemployed for 27 weeks or more. The fall in job cuts may mean that employers are simply staying with the workers they have, resulting in a stagnant job market."
During the second quarter of 2003, employers announced a total of 247,737 job cuts, down 23 percent from the 355,393 figure announced in the second quarter of 2002. Since the beginning of the year, there have been 630,532 announced layoffs, a 14 percent reduction from the prior-year total of 735,527.
"Job cuts are still quite a bit higher than pre-2001 levels, but they are certainly coming down," said Challenger. It is encouraging to see two consecutive months of job-cut totals below 70,000 — something that has not occurred since 2000."
May credit downgraded
Standard & Poor's, one of the nation's Big Three corporate credit rating agencies, has downgraded about $3.9 billion in May Department Stores Co. debt, citing "a continuing decline in May's performance."
The rating on the retailer's corporate credit and senior unsecured debt was reduced to "BBB+" from "A," and its short-term corporate credit and commercial paper ratings were cut to "A-2" from "A-1."
"The company has suffered from intense competition, lagging consumer confidence, a poor economy, a rising unemployment rate that has pared disposable personal income, and the adverse impact that world events have had on consumer appetites for spending," said S&P credit analyst Gerald Hirschberg. "This has led to an ongoing deterioration in the company's credit protection ratios." The outlook isn't particular bright, either. S&P said, "The business environment will make it very challenging to May to significantly improve these measures for the near future."
Factory orders get unexpected boost
In a sign that the manufacturing economy may be starting an overdue turnaround, factory orders moved up unexpectedly in May, boosted by a hefty gain in orders of non-durable goods, the Commerce Department reported.
Factory orders climbed by 0.4 percent and had been expected to come in unchanged. The May increase followed a revised drop of 3.0 percent in April.
Orders for non-durables rose by 1.2 percent, recovering from a steep slide of 3.7 percent in April. But orders for durable goods — items, from toasters to aircraft, expected to last for more than three years — slipped by 0.4 percent, largely hurt by a steep decline in the transportation sector. Stripping out transportation, orders rose by 0.8 percent.