Planned Job Cuts Stabilize at Pre-Recession Rates
This morning, the outplacement consulting firm Challenger, Gray & Christmas said that planned payroll cuts were 38,810 in May — roughly the same level as in April, when job cuts hit a four-year low. It’s good news: Planned layoffs have stabilized close to their rate before the recession hit. As long as employers continue to add jobs to already winnowed payrolls, the unemployment rate should start to cede in the second half of the year.
“Announced job cuts have, for all intents and purposes, returned to pre-recession levels. What makes the low job-cut totals we have seen this spring particularly remarkable is that we still have not reached what is the slowest downsizing period of the year, which typically occurs during the summer months,” John Challenger, the company’s chief executive, said in a release. “It is difficult to imagine the pace of downsizing slowing even further, considering that the economy, while recovering, is still in a relatively fragile state. However, monthly job cuts may indeed continue to fall during the summer, when many businesses hold off on making dramatic staffing changes.”
But the private sector has thus far not added many jobs. And local and state governments are being hit with rising expenditures on social programs as well as declining tax revenue — meaning job cuts are coming. A recent National League of Cities report warned of major service and payroll cuts. Thus, even if the unemployment rate falls, it might do so only slowly.
The next major Labor Department unemployment report comes out on Friday, and economists are expecting the economy to create 500,000 new jobs.