Reaching levels not seen in nearly five years, 112,884 jobs were taken off the table in October. Leading the pack for the month of October were the following industries: financial, automotive, pharmaceutical, industrial goods, computer, and consumer products with each cutting 17,949; 15,692; 8,956; 8,252; 7,548; and 6,946 jobs, respectively.
Data: Challenger, Gray & ChristmasCharting: rp
October’s total is nearly 20 percent higher than September’s job cuts – that is huge! One question I am wondering is, how much worse will it become before it gets better?
After bouncing up and down this summer, it appears as though job cuts are trending upwards since August. This is tremendously disturbing, especially when year-over-year we see that cuts decreased steadily from August to December. With the economic contraction in full swing, it is likely cuts for November will remain above 95,000 for the month.
Data: Challenger, Gray & ChristmasCharting: rp
Looking at this year’s leaders, we see that finance holds the crown, automotive is trailing and picking up steam, while government/non-profit jobs remain at an arm’s length in a distant third.
Cuts in the finance sector, which have slowed down, will most likely continue on their deceleration while I expect the automotive sectors cuts to pick up tremendous steam.
Today, General Motors reported their quarter with an astounding net loss of $2.5 billion. What struck me was the $1.7 billion non-cash charge for the settlement concerning the elimination of post-65 salaried retiree healthcare coverage – ouch. You better believe there are more cuts coming down the line.
Ford, on the other hand, reported a mind-numbing $7.7 billion cash burn for the quarter. This is the kind of thing that makes you slam your head against a desk, full speed. Problem: efforts to counter this mounting burn is being offset by reduced sales. More cuts, more cuts and more cuts are in store for the near-term.
According to Federal Reserve policy-maker Dennis Lockhart, "The U.S. economy in September and October appeared to weaken dramatically ... Problems are now broad-based."
With this knowledge we can only expect auto sales to weaken further, continuing the downward trend and increasingly sputtering GM and F into further trouble. More on this later…
Data: Challenger, Gray & ChristmasCharting: rp
**2008 data is a prediction based upon the author's calculations
Now, assuming that all of that news was absorbed into your skull, let us move onto something which may be considered good news.
Considering the scale of the current economic retrenchment, we see that 2008 will likely not yield over 1.2 million job cuts. According to my calculations we will hover somewhere between 1.04 and 1.1 million cuts for the year. Essentially, we are living 2005 all over again.
The spin on this is it could be much worse, for instance, 2001 which had over 1.9 million job cuts. Only time will tell as November and December send 2008 on its merry way and into the history books.
rp
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