June Job Cuts 300% Higher Than Last Year, Half as Many as May
Outplacement firm Challenger, Gray & Christmas on Wednesday released its job-cuts report for June. U.S. employers announced 170,219 job cuts in June, a drop of 57.0% from May’s total of 397,016 job losses. The June total represents a year-over-year increase of 306%.
Compared to job losses that were 1,500% higher year over year in April and 578% higher in May, June’s job cuts were a considerable improvement.
During the second quarter, 1.24 million Americans lost their jobs. The number of cuts rose 257% from the 346,683 jobs lost in the first quarter of this year and 781% from the 140,577 recorded in the second quarter last year. The second-quarter total is more than double the previous record total posted in the third quarter of 2001.
Andrew Challenger, vice-president of the outplacement firm, noted that as the number of cuts is trending downward as expected, job losses may pick up again: “[W]ith a resurgence in cases, millions of Americans out of work, and enhanced unemployment benefits coming to an end soon, we may expect more companies to make cuts as consumer and business spending slows.”
For the year to date, job losses total nearly 1.6 million, up by 379% year over year and 77% higher than the previous six-month record total of nearly 891,000 set in the first half of 2009. A total of 1.01 million of the second-quarter cuts were attributed to the coronavirus outbreak and the forced shutdowns of nonessential businesses.
Another 228,592 of the year-to-date job losses were attributed to market conditions, while 71,814 were due to businesses closing and 62,564 to lack of demand. Low crude oil prices have cost 16,805 job losses so far this year.
Industry sectors hit hardest in June were entertainment/leisure (92,954 announced cuts), government (24,911) and services (7,076). For the year to date, the entertainment/leisure sector has lost 671,840 jobs, a year-over-year increase of more than 7,500%.
Challenger added, “Many people who thought they were temporarily out of work or simply furloughed are learning their positions are gone for good.” U.S. bankruptcy filings have forced 9,581 job losses so far in 2020.
Year to date, U.S. firms have announced plans to hire 1.84 million workers, including 75,454 hiring announcements announced in June. More than 800,000 of those new jobs were announced in March and were directly the result of the COVID-19 outbreak.
New York-based employers announced the most job cuts in June with 37,527. Florida (24,820 planned cuts), Washington (14,108), Ohio (8,636) and Texas (7,336) round out the five states losing the most jobs in June.
Later Wednesday morning, ADP is expected to report that June payrolls rose by 3.5 million, a sharp U-turn from the estimated 2.76 million jobs lost in May. The U.S. Bureau of Labor Statistics report on the employment situation is due Thursday, and the consensus estimate calls for June nonfarm payrolls to increase by 3 million jobs. The unemployment rate is forecast to fall from 13.3% in May to 12.4%.
While new claims for unemployment benefits fell last week to 1.48 million, more than 30 million Americans had filed for benefits through June 6, far more than the 1.55 million who filed for benefits for the same period in 2019.