Job Cuts and Jobs Creation

The latest job-cut report from global outplacement consultancy Challenger, Gray & Christmas, released yesterday, provides fuel for optimism. The firm finds planned job cuts (that is, new announcements of layoffs) fell in February to 42,090, the lowest level since 2006.

The February total was 41 percent lower than January's total, and the number of job cuts announced this February was 77 percent lower than job cuts announced in February 2009.

What's more, Challenger's industry year-to-year comparison, Jan-Feb 2009 to Jan-Feb 2010, shows some sectors that were hit hard seem to have leveled off, if not rebounded. For both the automotive industry and industrial goods sectors, the firm reports a 90 percent drop in downsizing. Meanwhile, layoffs in the retail industry have dropped by 75 percent.

But perhaps the most noteworthy information contained in the latest job-cut report from Challenger, Gray & Christmas is the reason for job cuts. Nearly half of the planned job cuts announced in February, 20,068 positions, can be attributed to mergers/acquisitions. In other words, arbitrary job cuts, all too common during the recession, are no longer as prevalent.

As part of its comprehensive report, Challenger, Gray & Christmas also provides data on announced hiring plans. In February, employers announced hiring plans for 8,300 jobs. Clearly, jobs creation is now the issue.