Announced Job Cuts in U.S. More Than Triple From Year Ago
Wednesday, October 05, 2011
Announced Job Cuts in U.S. More Than Triple From Year
Ago, Challenger Says
By: Alex Kowalski , Bloomberg
U.S. employers announced the most job cuts in more than two
years in September, led by planned reductions at Bank of America
Corp. (BAC) and in the military.
Announced firings jumped 212 percent, the largest increase since
January 2009, to 115,730 last month from 37,151 in September 2010,
according to Chicago-based Challenger, Gray & Christmas Inc.
Cuts in government employment, led by the Army's five-year troop
reduction plan, and at Bank of America accounted for almost 70
percent of the announcements.
While the bulk of firings are not "directly related" to economic
weakness, they "could definitely be a sign of more cuts to come,"
John A. Challenger, chief executive officer of Challenger, Gray
& Christmas, said in a statement. "Bank of America is not the
only bank still struggling in the wake of the housing collapse, and
the military cutbacks are probably just the tip of the iceberg when
it comes to federal spending cuts."
More reductions will add to the pool of job seekers competing
for work as policy makers, including President Barack Obama and
Federal Reserve officials, strive to spur the labor market.
Payrolls probably didn't rise fast enough last month to lower the
jobless rate, according to a Bloomberg News survey of economists
before the Labor Department's monthly jobs figures in two days.
Compared with August, job-cut announcements climbed 126 percent,
the Challenger report showed. Because the figures aren't adjusted
for seasonal effects, economists prefer to focus on year-over-year
changes rather than monthly numbers.
Government agencies announced 54,182 reductions in September. Of
those, 50,000 resulted from the troop reductions announced by the
Army, Challenger said.
Financial Companies
Financial companies announced 31,167 cuts, the second most
layoffs. Bank of America, the biggest U.S. lender by assets, said
on Sept. 12 it will eliminate 30,000 jobs in the next few years as
part of Chief Executive Officer Brian T. Moynihan's plan to bolster
profit. The reductions, equal to about 10 percent of the staff, are
part of an overhaul that aims to remove about $5 billion in annual
costs by the end of 2013.
Today's report also showed that employers announced plans in
September to hire 76,551 workers, up from 15,201 the prior month,
while down from 123,076 in the same month last year. Retailers led
the gains, planning to add 70,912 positions ahead of holiday.
September Employment
Employers probably added 60,000 jobs in September as the
unemployment rate held at 9.1 percent, according to the median
forecast in a Bloomberg News survey of economists ahead of the Oct.
7 Labor Department figures.
The Fed 'will continue to closely monitor economic developments
and is prepared to take further action as appropriate to promote a
stronger economic recovery in a context of price stability," the
central bank's Chairman Ben S. Bernanke said yesterday in testimony
to Congress.
"Recent indicators, including new claims for unemployment
insurance and surveys of hiring plans, point to the likelihood of
more sluggish job growth in the period ahead," he said.
Challenger's data do not always correlate with figures on
payrolls or first-time jobless claims as reported by the
government. Many job cuts are carried out through attrition or
early retirement. Some employees whose jobs are eliminated find
work elsewhere in their companies and many announced staff
reductions never take place because business improves. The totals
also include foreign affiliates.