July Layoffs Lowest Yet This Year

The outplacement firm of Challenger, Gray & Christmas has released its job-cuts report for July, indicating that July layoffs declined by 2% from June’s layoff count, which had fallen by 45% from the count in June of 2011. The drop in July layoffs is just the third monthly decline so far this year.

Announced July layoffs totaled 36,855, down from 37,551 in June. In July 2011, employers had announced job cuts of 66,414. So far this year, a total of just under 320,000 job cuts have been announced, up 2.5% over the 312,220 announced in the first seven months of last year.

The financial sector led the layoff parade, with 6,156 job cuts announced in July. Morgan Stanley (NYSE: MS) and Citigroup Inc. (NYSE: C) were singled out in the report for having laid off more than 5,500 workers in 2012, due in large part to the European financial crisis:

The situation in Europe is far from being resolved and ongoing weakness here could continue to take a toll on the financial sector. Making matters worse, is evidence that some big banks did not learn anything from the 2008 collapse and continue to make bad bets resulting in massive losses.

The computer industry leads in total layoffs announced for the year, with about 35,000 job cuts announced so far. That is followed by the transportation sector, which has announced layoffs of nearly 30,000 workers, up more than 300% from the first seven months of 2011.

The Challenger report should raise hopes ahead of tomorrow’s report on nonfarm payrolls. The consensus estimate calls for the addition of 100,000 jobs in July, up from 77,000 in May and 86,000 in June. The unemployment rate is expected to stay at 8.2%. Yesterday’s better-than-expected reading on new claims for unemployment benefits adds to the expectations for nonfarm payrolls.

Paul Ausick