Your Economy (No Politics)

[Bullwinkle]

Job cuts fell 25% compared with March of 2005
By Victor Epstein
Bloomberg News
Wed, Apr. 05, 2006


Job cuts announced by U.S. employers fell 25 percent in March from a year earlier, according to a monthly survey released yesterday.

Reductions fell to an 11-month low of 64,975 workers last month, which compares with 86,396 cuts a year ago, said Challenger, Gray & Christmas Inc., a Chicago-based placement firm.

Because the figures are not adjusted for seasonal effects, economists look at year-over-year changes instead of monthly changes. The March figure compared with 87,437 cuts in February.

There are fewer job cuts and increased hiring as many companies find they cannot meet rising demand through productivity gains - that is, more output per worker. The Challenger report suggests the labor market will provide more support this year for consumer spending and home purchases.

"It is clear employers are focusing their efforts on worker retention," John A. Challenger, chief executive officer of the placement firm, said in a statement. "The labor market is quickly getting to the point where we will see upward pressure on wages, as employers attempt to attract more workers and retain the ones they have."

Productivity fell at an annual rate of 0.5 percent during the final three months of 2005, compared with an average gain of 3.5 percent the preceding two years, according to Labor Department data.

For the first quarter of 2006, announced job cuts were down 11 percent, to 255,878, from the first quarter of 2005, according to Challenger.

Telecommunications companies announced the most job cuts in March, with 11,047 affected positions. Utilities had the fewest announced reductions, with 20 cuts.

Economists watch initial unemployment filings and job-cut announcements for clues to monthly payroll gains, because hiring typically accelerates as firing wanes.

Many job cuts do not involve layoffs because they are carried out through attrition or early retirement. Moreover, some employees whose jobs are eliminated find work elsewhere in their companies, and many announced staff reductions never take place because business improves.

Employment Cuts

Staff cutbacks announced by U.S. companies

Monthly Totals 2005
March... 86,396
April... 57,861
May... 82,283
June... 110,996
July... 102,971
Aug... . 70,571
Sept... . 71,836
Oct... . 81,301
Nov... . 99,279
Dec... . 107,822

Monthly Totals 2006
Jan.... 103,466
Feb... . 87,437
March... 64,975

By Industry, 2006 to date
Automotive... 42,398
Gov't./nonprofit... 31,971
Food... 24,085
Telecom... 23,791
Retail... 20,028

http://www.philly.com/mld/inquirer/business/14264512.htm