December Job Cuts Send Annual Total to Highest in 3 Years

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The outplacement firm of Challenger, Gray & Christmas on Thursday released its job-cuts report for December, showing that a total of 43,844 planned U.S. job cuts were announced last month, an increase of 35.3% compared with December 2017. The announced cuts were 17.3% below November’s total of more than 53,000.

For the year, 538,659 announced job cuts were 28.6% higher than in 2017 and reached their highest level since 2015 and the second highest total since more than 600,000 job cuts were announced in 2011.

In the fourth quarter, employers announced 172,601 job cuts, nearly 43% more than in the third quarter and 77.4% higher than the 97,292 cuts announced in the same period in 2017. GM announced 14,000 job cuts in November, the big driver for the higher quarterly total.

All told, the health care industry reported plans in December to eliminate 4,665 jobs, the third highest total for the month, behind 6,352 cuts in the services industry and 6,135 cuts in pharmaceuticals. For the year, the retail industry has reported plans to cut 98,563 jobs, the most of any industry and well ahead of the second-place telecom industry which has announced 59,568 cuts.

Andrew Challenger, vice president of the outplacement firm, said:

We’ve seen a number of companies responding to changing consumer behavior this year, and with tax savings and a strong economy, making staffing decisions ahead of a potential downturn next year. … 2018 saw a number of announcements due to shifting consumer demands brought on by new technologies, such as online shopping and mobile services, as well as from companies that are streamlining to incorporate this new tech. … Shifts in technology are ultimately impacting all other industries, as companies pivot to integrate and benefit from these new tools. We’ve seen it in announcements from the Retail, Automotive, and Finance sectors.

The retail industry accounted for more than 18% of 2018’s job losses. Retailers closed 3,886 stores in 2018, far fewer than the 9,801 closures in 2017. But massive job losses for the shutdown of Toys “R” Us and Sears/Kmart combined to add about 40,000 lost jobs in 2018.

Challenger tracked nearly 1.02 million new job announcements in 2018, including 714,000 seasonal jobs. In all of 2017, employers added 1.1 million jobs.

For the year, California (97,163), New York (82,210) and New Jersey (42,642) lost the most jobs.

The top three reasons given for the 2018 job cuts are restructuring (184,931 jobs cut), the business is closing (145,298 jobs lost) or voluntary severance (48,745). Corporate cost-cutting initiatives cost 46,259 jobs last year.

On Friday the U.S. Department of Labor is expected to report that U.S. employers added 180,000 jobs in December, above the November total of 155,000 new jobs. ADP’s employment report, which was delayed one day, will be announced later this morning and is expected to show 175,000 jobs added in December, down from 179,000 in November.

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