U.S. Firms Intend to Cut Fewer Jobs

U.S. employers announced plans in August to cut 74,150 jobs, a 7.2% decrease from the same month last year, a private survey found.

Plans for job cuts this year have fallen 23% through August from the comparable period a year earlier, according to Challenger, Gray & Christmas Inc., the Chicago-based placement firm that compiled the survey. Most of the announced job cuts in August and this year came in the financial services industry.

Job losses have slowed as companies that shed workers in 2003 reach the limits of what they can squeeze out of their existing workforces to meet demand. A government report last week showed that U.S. worker productivity grew in the second quarter at the slowest pace since the fourth quarter of 2002.

“It appears that job-cut activity is holding steady in the 60,000-to-70,000 range, which is above pre-recession levels but still encouraging,” said John Challenger, chief executive of Challenger, Gray & Christmas. “The problem is that this holding pattern is being mimicked when it comes to hiring.”

A Labor Department report Friday showed that employers added a net 144,000 workers to payrolls in August, the most since May and marking the first acceleration in five months.

Announced plans to hire, which Challenger tracked for the first time in May, rose to 132,105 in August from 26,880 a month earlier, Challenger said.

The biggest additions in the months ahead will come from retailers, which announced plans to hire 83,450 employees, the firm said.

“These expectations probably include the typical hiring surge that coincides with the coming of the holiday selling season,” Challenger said. “While all hiring is good for the economy, it must be noted that retail jobs added the next few months may disappear by February.”

Last month’s planned job-cut total was 6.6% higher than July’s 69,572 and the most since February, when employers said they planned to trim 77,250 jobs, Challenger said. The figures aren’t adjusted for seasonal variations, making it difficult to compare them from one month to the next.

Job-cut plans are not the same as dismissals because many of the reductions will be carried out through attrition or early retirement. Some employees find work elsewhere in their companies, and many announced staff reductions never take place because business improves.