June 11, 2001-- Home Textiles Today,
Job cut rate slashed in half during May
In one hopeful sign of a stabilizing economy, the rate of projected job layoffs was slashed by more than half during May, declining by 52 percent, to 80,140 from a total of 165,564 job cuts in April.
Challenger, Gray & Christmas, the international outplacement company that tracks job cuts on a monthly basis, said May marked the first time in the past six months when layoffs fell beneath the 100,000 level.
And underlining the severity of the recent economic slowdown, Challenger said, "Remarkably, there were more job cuts, 652,510 in the past five months, than in all of 2000, 613,960." Moreover, said Challenger, layoffs in the five-month period exceed the total annual levels of eight of the past 10 years.
However, May numbers were still almost three times the 27,031 layoffs recorded during the same month a year ago, said Challenger. This year, job cuts have averaged 130,502 a month.
"Tech-related industries continue to bear the brunt of the job-cutting spree," said Challenger. "Telecommunications, computer, electronics and e-commerce make up four of the top five job-cutting industries so far this year. Together, cuts in these industries total 268,437, which is 41 percent of all cuts announced in 2001."
The only "old economy" industry to rank among the top five in layoffs was automotive, with 83,547 job cuts, which ranked second on the list behind telecommunications.
"We have seen a dramatic shift in where job cuts are coming from," said John Challenger, ceo. Last summer, cuts were accelerating in the nation's manufacturing sector, but in December, the high-tech bubble began to burst and, since then, the number of cuts in this sector have substantially outpaced those in any other industry. The speed and the precipitousness that has marked the decline of the sector is now being felt in the unemployment rate. It will not be much longer before it is felt in consumer confidence and retail sales."
The high-tech slump, exacerbated by sharply rising energy costs, has hit the state of California particularly hard, said Challenger. Companies in the state have announced 106,834 job cuts so far this year, more than double the 42,366 last year. And California layoffs are nearly double the rate of Illinois, the second-ranking state in job cuts, with 56,711 layoffs so far this year.
Third-quarter slowdown seen for hiring, a continuing trend
On the flip side of the jobs picture, Manpower Inc., the nation's largest staffing company, said a broad slowdown in hiring is expected to continue through the third quarter.
After canvassing almost 16,000 U.S. companies about their hiring plans, Manpower said about 27 percent plan to add staff in the next three months, while 9 percent plan reductions and 59 percent expect no change. Another 5 percent said they are undecided. The third-quarter survey results are less optimistic than they were during the same period last year, when 35 percent planned to add staff and only 5 percent expected cutbacks.
"Companies across all industries are continuing to show clear caution in hiring," said Jeffrey Joerres, ceo. He said manufacturing, for both durable and non-durable goods, showed "particularly weak employment potential."
Joerres added, "The projected hiring strength in the present economy has declined for the second consecutive quarter and now seems to be approaching the 1990-1991 levels in our survey history."
Adjusted for seasonal variation, hiring projections in all industries declined from prior-year levels and are currently at or near one-half of those recorded in the survey of six months ago.
"The best opportunities for employment," said Joerres, "are in industries that traditionally are active in this season." The construction, wholesale and retail trades have all stepped up demand for workers each quarter this year, but the rate of growth lags well behind similar periods during last year, the Manpower survey showed.