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Dismal numbers are reported for November, with December looking worse.
Stephen Taub, CFO.com | US
December 5, 2008
The job picture gets uglier by the week and doesn't figure to bottom out for some time. In November payrolls plummeted by a stunning 533,000 jobs and the unemployment rate surged to 6.7 percent, the highest since October 1993. This is the largest drop in jobs since December 1974.
In fact, Bloomberg had estimated a decline of 335,000 jobs and a jobless rate of 6.8 percent. Recall that workers are considered unemployed by the government only if they are out of work and actively seeking a job.
What's more, the layoff picture does not appear any brighter heading into the last month of the year. In the first few days of December, more than two dozen companies across a wide range of industries announced hundreds and thousands of job cuts. On Thursday alone, five companies announced nearly 23,000 layoffs, suggesting that the total December numbers could wind up to be more dismal than November's tally.
For example, AT&T plans to cut about 12,000 jobs, or about 4 percent of its total workforce, citing economic pressures, a changing business mix, and a more streamlined organizational structure. The reductions will take place in December and throughout 2009.
The telecom giant also notes that while it is reducing jobs in some areas, it continues to add positions in other parts of the business — such as wireless, video, and broadband — to meet customer demand. In a statement, AT&T said that many nonmanagement employees affected by the reductions have a guaranteed job offer under union contracts, and that all employees will receive severance in accordance with management policies or union agreements.
Also on Thursday, DuPont announced the elimination of 2,500 jobs, principally in businesses that support the motor vehicle and construction markets in Western Europe and the United States. Meanwhile, car rental company Avis Budget Group said it is slashing more than 2,200 jobs, and media giant Viacom expects to cut about 850 jobs, or 7 percent of its workforce.
As expected, job reductions have not abated in the financial-services industry. Zurich-based bank Credit Suisse announced on Thursday that it would cut 11 percent of its operation, or 5,300 jobs. And on Wednesday, financial-services company State Street Corp. said it plans to eliminate 1,600 to 1,800 positions, or 6 percent of its global workforce, to reduce its operating cost base. The reductions will occur principally between now and the end of the first quarter of 2009.
The State Street reductions will largely be achieved by consolidating middle and senior management ranks, according to a statement. About two-thirds of the reductions will occur within North America, with the remainder in Europe and the Asia-Pacific region. "It is important for State Street to continue to deliver consistent earnings growth, particularly during this difficult environment," said Ronald E. Logue, chairman and CEO of State Street. "Taking this action increases our ability to do so."
Earlier in the week, JPMorgan Chase said it would slash 9,200 jobs at Washington Mutual, which it acquired back in September. About 4,000 positions will be purged by the end of January, according to the Associated Press. And Japanese brokerage Nomura Holdings Inc. expects to eliminate up to 1,000 staffers in London, or as much as 22 percent of its workforce there.
Among smaller institutions, investment bank Jefferies Group said it will trim 315 jobs, or about 13 percent of its operation, by the end of the year.
Other industries reported layoffs as well. In the electric-power sector, Baltimore-based Constellation Energy Group Inc. said earlier in the week that it was cutting about 800 jobs from its global operation. And software powerhouse Adobe Systems plans to decrease its headcount by 600, or 8 percent of its workforce, attributing the cut to slower revenue growth despite reporting better-than-expected preliminary earnings for the fourth quarter.
In the casino business, Black Gaming said in a regulatory filing that it will temporarily reduce operations at its Oasis Resort Casino Golf because of a weakening economy and anticipated future decline in demand for its casino services. This will force the company to lay off 500 of its more than 2,000 employees. Further, The Seneca Gaming Corp., a wholly owned, tribally chartered corporation of the Seneca Nation of Indians, is laying off 210 employees at three western New York casinos, according to the Associated Press.
Elsewhere last week, jet-engine maker Pratt & Whitney announced it is laying off 350 employees, and telephone and broadband provider Windstream Corp. expects to cut 170 jobs.
Alpha Natural Resources said its subsidiary, Kingwood Mining Co., will cease coal-mining operations at the Whitetail Kittanning mining complex in Preston County, West Virginia, at the end of December. Kingwood's 329 employees have been given a 60-day notice regarding the company's decision to close the complex, in accordance with the Worker Adjustment and Retraining Notification Act, and will receive their regular rate of pay in lieu of work, if work is not available, through February 3, 2009, or the date they accept other employment, whichever is earlier.