Did The Sequester Have a Hand in This Quarter’s Planned Layoffs?
While the numbers are beginning to show more and more often that the labor market is strengthening, there is the occasional setback for job growth. Against a background of three consecutive weeks of spikes in initial jobless claims — the Labor Department’s announced Thursday that the number of applications for unemployment benefits jumped to their highest level since late November last week — the report on planned layoffs from the consultant group Challenger, Gray & Christmas showed additional weakness.
The number of planned layoffs at firms in the United states did fall in March, but downsizing at numerous retail businesses during the first quarter still contributed to the largest amount of cuts in over a year. Employers announced they would remove 49,255 jobs from their payrolls in March — a decrease of 11 percent from the 55,356 reported in February. However, March’s planned layoffs were 30 percent higher than the figure recorded from the same period a year ago, representing the fourth time in the last six months that monthly job cuts have been higher than the previous year.
On a quarterly basis the numbers were even worse. For the quarter, 145,041 planned layoffs were announced, an increase of 5.6 percent from the fourth quarter of last year. According to Reuters, it was the worst quarter for layoffs since the third quarter of 2011…
Cuts in the retail sector pushed up March’s overall figures, with companies letting go 16,445 workers, up from 2,279 in February. Following closely behind the financial sector’s 33,819 job cuts, retailers have laid off 25,400 workers in the first three months of the year.
“While consumer spending is up in 2013, many retailers have been fighting for their lives since the end of the recession. We could see more retail job cuts in the months ahead as many traditional retailers struggle to find their footing in a more segmented and internet-driven retail environment. Best Buy (NYSE:BBY), JC Penney (NYSE:JCP), Sears (NASDAQ:SHLD), Kmart and Blockbuster have each been forced to shed workers in recent months or, as in the case of Blockbuster, shut down entirely,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas, in the report.
Another trend that could negatively impact hiring in the United States is the $85 billion in government spending cuts that went into effect last month. While “sequestration has not yet led to a significant surge in government job cuts, which totaled 1,448 in March,” the “self-imposed cost-cutting measures that went into effect March 1 are already taking a toll on the aerospace and defense industry,” Challenger added. Last month, those industries announced job cuts totaling 3,921, of which more than one-quarter were the direct result of “a sequester-related lost government contract.”
Here’s how the 3 major stock indices traded on Thursday:
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