Pace of Corporate Layoffs Begins to Slow

Planned layoffs by U.S. employers dropped 16% in May from the previous month, the fourth consecutive decline in monthly job cut announcements, according to Chicago-based outplacement consultant Challenger Gray & Christmas. Government and nonprofits led the announcements with 22,317 planned cuts in May.

“This decline in job cuts could be short-lived,” said John Challenger, CEO of Challenger Gray. “The second quarter is typically the lowest quarter of the year when it comes to job cuts.” Indeed, corporate downsizing could pick up again in the latter half of the third quarter through the end of the year, he noted.

According to the firm, between 2001 and 2008, the lowest job cuts occurred in the second quarter, when planned layoffs were about 10% lower than in the third quarter. Most downsizing activity takes place during the fourth quarter, according to Challenger Gray. The firm’s monthly study is not scientific and only covers announced layoffs.

Though they were lower than the previous month, May’s job cut announcements were 7.4% higher than cuts announced in May 2008. So far this year, employers have announced 822,282 job cuts, more than double the 394,193 announced in May last year.

From January through May of this year the government and non-profit sector has announced 82,864 layoffs. According to the Pew Charitable Trusts’ Philadelphia Research Initiative, all but one of the 13 cities it studied is mired in budget deficits, ranging from a low of $44.3 million in Seattle to $6.6 billion in New York.

Amidst the turmoil of bankruptcies and government bailouts, auto manufacturing announced 10,578 more job cuts in May for a total of 111,614 since January. “While the automakers expect a rebound in the second half of the year, we could continue to see heavy job cuts in the sector, as low output across the board trickles down through the supplier chain,” said Challenger. Job cuts from dealership closures were not included in the firm’s figures.

The Automatic Data Processing employment index, also released today, says that the private sector cut 532,000 net jobs in May, down from the 550,000 cuts predicted by analysts. On Friday, the U.S. Department of Labor will release new unemployment figures, which industry watchers predict could hit 9.2%, up from 8.9% in April.

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