US Layoffs Spike, Raising More Recession Worries
Data from an employee research firm shows a surge in layoffs by big companies in November. U.S.-based companies announced 53,073 job cuts in November, up 51% from the same month last year.
A pattern has started to form. Large companies have announced 494,775 cuts in the first 11 months of the year, 28% higher than the 386,347 announced through this point last year.
Andrew Challenger, vice president of Challenger, Gray & Christmas, Inc., the firm that tracks layoffs said, “Monthly job cut announcements averaged under 35,000 in all of 2017 and just under 44,000 in 2016. In 2018, cuts are averaging nearly 45,000 per month, with the last four months averaging over 55,000. This upward trend is indicative of a potential economic shift and could spell a downturn.” He went on to comment that many portions of the economy and jobs markets continue to be strong. The government will publish the jobs report for November on Dec. 7.
Most of the layoffs came from several huge companies. These included 14,000 by General Motors Company (NYSE: GM). However, there are attempts underway by both President Trump and politicians from the affected states to save some of the jobs or replaced them by work at factories other than those which will cut back production, or be closed.
Another company that plans to idle workers is Japan-based car maker Toshiba, which will cut about 7,000 jobs. Germany pharmaceutical company Bayer said it would trim 12,000. The company recently completed a merger with agricultural biotechnology company Monsanto.
For the 11 months, cuts by retail companies were by far the largest number at 96,504. Traditional bricks-and-mortar retail businesses continue to fight online shopping but for the most part, have lost the battle. Telecommunications companies have chopped 59,518 so far this year, and financial firms 41,351.
Companies that have gone out of business or are struggling with profits were a major contributor to layoffs. Challenger Gray pointed out, “Companies claimed restructuring was the cause of 177,441 job cuts this year, while 136,605 were due to plant, unit, and/or store closures. Another 35,456 were due to bankruptcy proceedings.”
These are signs that economic growth may flatten, or the economy may contract for the first time since the Great Recession, which ended in June 2009. Global organizations such as the International Monetary Fund and the World Bank have warned GDP growth throughout most of the world will taper off in 2019 and 2020. The stock market’s recent fall is due to partly over anxiety about a slowdown.
|Job Cuts by Industry|
|Challenger, Gray & Christmas, Inc.|
|Job Cut Announcement Report|
|17-Nov||18-Oct||18-Nov||YTD 2017||YTD 2018|
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