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Job cuts suggest U.S. slowdown

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  • Job cuts suggest U.S. slowdown

    Job cuts suggest U.S. slowdown
    July 06, 2006 (Globe & Mail)

    A sharp increase in the number of jobs lost in the United States suggests the economy south of the border is slowing, according to a leading consulting firm.

    Outplacement consultant Challenger, Gray & Christmas Inc. said its figures show that companies planned 67,176 job cuts in June, a 25 per cent increase from 53,716 in May. This is the first time in six months that the job cut number has gone up, it said.

    ”Companies' costs are soaring, not only because of high energy prices, but also because of higher costs for raw materials and labour,” he said. ”Many companies are unable to pass along higher costs in this increasingly competitive global economy. These companies have no choice but to cut costs, which often means cutting payroll, closing plants or merging with a rival to reduce competition.”

    The automotive industry announced the most job cuts in June, at 12,159. The second highest number came from industrial goods makers, at 7,565. Third was the financial industry at 7,292.

    AntiSpin: The US auto industry is clearly hurting, in a hell of its own making. Among various blunders, failure to plan for higher gasoline prices and design more fuel efficient cars, thus handing the market over the Toyota and others that have been in the hybrid game for many years. Also, allowing themselves to become dependent on incentives (i.e., lending money for free) for sales, it's no surprise that they're hurting now that interest rates are rising and auto makers can no longer afford to lend at 0% or very low rates.

    Many of the 7,292 layoffs in the financial industry were likely related to real estate, due to the Mortgage Recession:
    "As interest rates continue to climb in light of the Federal Reserve's 17th consecutive rate hike, the mortgage industry is headed for a "Mortgage Recession" unlike anything seen in previous periods."

    However, Challenger, Gray & Christmas Inc. does not track small business layoffs, so job cuts in housing related industries comprised of many small businesses do not show up in their numbers. Expect to see significant reductions on jobs in the housing industry, from construction to real estate brokerage services, over the next six months.

  • #2
    Re: Job cuts suggest U.S. slowdown

    paul kasriel published a small study about 2-3 yrs ago, which demonstrated that the challenger numbers did not predict either employment [jobs] or unemployment.