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December Job Cuts Fall 34 Percent

Published Wednesday Feb 2, 2011

After reaching a seven-year high in 2009, downsizing activity in 2010 fell to its lowest level since 1997, as employers announced plans to eliminate 529,973 positions. The year came to a close with the lowest monthly job-cut total since 2000.

Planned layoffs totaled 32,004 in December, down 34 percent from 48,711 in November, according to the 2010 year-end job-cut report by global outplacement consultancy Challenger, Gray & Christmas, Inc., based in Chicago. December job cuts were 29 percent lower than the same month a year ago when 45,094 cuts were announced.

December surpassed August (34,768) as the lowest job-cut month of the year. It was the lowest monthly total since June 2000 when employers cut 17,241 jobs.

The December decline marked a fitting end to 2010. The 529,973 job cuts announced during the year were 59 percent fewer than the 1,288,030 layoffs recorded in 2009, the largest downsizing year since 2002 (1,466,823). The 2010 total was the lowest since 434,350 job cuts were announced in 1997.

"The downsizing phase of the recession really came to an end in 2009. Job cutting fell dramatically in the second half of that year. The pace of downsizing continued to slow in 2010 to levels we have not seen since before the 2001 recession," said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

Nearly every major industry category saw job cuts decline in 2010; some by more than 90 percent. Layoffs in the automotive sector fell 91 percent from an industry-leading 174,192 job cuts in 2009 to 16,001 in 2010. Industrial goods manufacturers saw job cuts plummet 79 percent from 125,423 to 26,487. Retail employers, which had 98,807 job cuts a year ago, announced 38,751 layoffs in 2010; a 61 percent drop.

Even government and non-profit, the largest job-cutting sector of the year, experienced a 17 percent drop in layoffs. However, this struggling sector was still forced to eliminate 142,255 positions in 2010. That was 165 percent more than the second-ranked pharmaceutical industry, which announced 53,636 layoffs in 2010.

"Unfortunately, the government sector is likely to see heavy job cuts again in 2011 as the budget shortfalls that existed in 2010 continue into the new year. In fact, the sector could see an increase in job cuts in 2011 as state and local agencies, which saw the heaviest downsizing last year, are joined by federal agencies under increasing pressure from a Congress determined to cut spending," noted Challenger.

"Despite the decline in job cuts in 2010, it was still a lackluster year for the overall job market. The private sector did experience 11 consecutive months of net job gains, as of November, but the gains were relatively small; not nearly enough to make a dent in unemployment, which stood at 9.8 percent heading into the final month of 2010," said Challenger.

"Unemployment will probably remain high throughout 2011. In fact, it could venture north of 10.0 percent again before the end of the year. Hiring in the private sector is expected to once again be slow and steady; too slow to offset losses in the government sector. However, hiring is likely to be significant enough to entice individuals who abandoned their job searches in 2009 and 2010 to re-enter the labor pool."

According to Challenger, re-engaged job seekers, who were not counted among the unemployed while not searching, coupled with newly laid-off government workers, could put upward pressure on the unemployment rate.

"Further job-search competition will come from people who are currently employed. They may have already seen some of their colleagues move to greener pastures, so they will be even more tempted to test the waters in 2011. Companies that are not quite ready to accelerate hiring will be required to focus more energy on retaining existing employees," said Challenger.

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