Planned layoffs at U.S. firms fell for a fourth consecutive month in May, reaching the lowest level in eight months and offering another sign that the United States may be pulling out of a steep economic tailspin.
Planned job cuts announced by U.S. employers totaled 111,182 in May, down 16 percent from the 132,590 layoffs recorded the previous month, according to a report released on Wednesday by global outplacement consultancy Challenger, Gray & Christmas, Inc.
May marked the lowest monthly total since 95,094 job cuts announced last September. Since reaching a peak in January, job-cut totals have fallen by an average of 17.5 percent per month, according to the report.
However, the decline in layoffs may not continue for long.
This decline in job cuts could be short-lived. The second quarter is typically the lowest quarter of the year when it comes to job cuts, John A. Challenger, chief executive officer of Challenger, Gray & Christmas, said in the report.
Corporate downsizing may continue to remain slow during the summer months, but if the past is any indication, we could see the pace accelerate again in the latter half of the third quarter through the end of the year, he said.
Much of the downsizing in coming months may come from state and local governments, which have been hard hit by shrinking tax revenues, according to the report.
The government and nonprofit sector led in job cuts, announcing 22,317 layoffs last month and marking the third straight month the sector was the top job cutter.
While job cuts in the automotive sector have already been heavy, they are likely to continue at a strong pace after General Motors Corp
While the automakers expect a rebound in the second half of the year, we could continue to see heavy job cuts in the sector, as low output across the board trickles down through the supplier chain, Challenger said, adding we have not even counted the job-cut figures resulting from dealership closures since the number of jobs affected has not been confirmed.
Overall, U.S. employers have announced 822,282 job cuts so far this year, more than double the 394,193 cuts announced through the same point last year, according to the report.
(Reporting by Chris Reese; Editing by Chizu Nomiyama)