Job Cuts Fall to Lowest Monthly Total Since 2000

Outplacement firm Challenger, Gray & Christmas reported on Thursday that U.S. firms announced 20,476 job cuts in June, a 88% decline from the 170,219 cuts announced in June 2020. The total fell by 16.7% month over month, following an increase of 7% in May.

March of last year marked the beginning of the massive job cuts related to the COVID-19 pandemic. Some 222,288 job cuts were announced that month, followed by 671,129 cuts in April.

For the first half of 2021, employers have announced 212,661 job cuts, the lowest six-month total since 1995. The six-month total last year was 1.59 million. For all of 2020, more than 2.3 million job cuts were announced, almost three times the 592,556 jobs lost in all of 2019.

Andrew Challenger, vice president of the outplacement firm, noted, “We’re seeing the rubber band snap back. Companies are holding on tight to their workers during a time of record job openings and very high job seeker confidence. We haven’t seen job cuts this low since the Dot-Com boom.”

Nearly half of the 2.3 million job cuts announced in 2020 were directly attributed to the COVID-19 pandemic. In June 2021, just 186 cuts were attributed to the pandemic, bringing the year-to-date total to 7,797.

Industry sectors hit hardest in June were energy (7,408 announced cuts), consumer products (1,791) and financial (1,735). In the first six months of 2021, job cuts have been highest in aerospace/defense (32,930), telecommunications (24,824) and services (17,977).

On the other side of the ledger, U.S. firms in June announced plans to hire 110,093 new workers. In the first six months of this year, employers have announced plans to hire a total of 551,789 new employees. That’s a year-over-year decline of 59% from the same period a year ago. In June of 2020, employers announced plans to hire 75,454, bringing the year-to-date total to 1.34 million.

Texas-based employers announced the most job cuts by state in June, with 7,892 planned cuts. California, with 2,497 planned cuts, Minnesota (1,688), Illinois (1,163) and Iowa (1,013) round out the five states losing the most jobs last month.

On Wednesday morning, ADP reported that private-sector payrolls increased month over month in June by 692,000, well above the consensus expectation for a gain of 550,000. The weekly report on new claims for unemployment benefits will be released later Thursday morning and is expected to show 395,000 new claims were filed in the week ending June 26. The monthly employment situation is due Friday morning and analysts expect nonfarm payrolls to rise by 675,000 month over month and the unemployment rate for June to drop from 5.8% to 5.7%.