Human Capital & Careers

Job Losses Widened in October

Challenger Gray and ADP both present severely worsening monthly employment reports, presenting a big job for President-elect Obama.
Stephen TaubNovember 5, 2008

A pair of new U.S. job reports — by outplacement consultancy Challenger, Gray & Christmas Inc. and by business outsourcing provider Automatic Data Processing Inc. — confirm what many people already sense: that positions are disappearing at their sharpest rate in years.

Challenger Gray reported that job cuts soared to the highest level in nearly five years. It counted 112,884 workers removed from their payrolls in October, 19 percent more than the September job-cut total of 95,094, based on announced plans. It cited heavy downsizing in the financial and automotive sectors.

What’s more, October’s cuts were 79 percent higher than a year ago, when employers announced plans to cut 63,114 jobs. Last month’s total was the largest since 117,556 job cuts were announced in January 2004. Altogether, employers have now announced 875,974 job cuts in 2008, 14 percent more than the 768,264 in all of 2007, according to the report.

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Of the 25 industry categories tracked by Challenger, 18 have experienced an increase in job cuts. “The fact that nearly three out of four industry categories are cutting more jobs is proof of how widely the impact of this downturn has spread,” said John A. Challenger, CEO of Challenger Gray.

Meanwhile, ADP reported that private-sector employment decreased by 157,000 in October. What’s more, employment fell by 31,000 in the service-providing sector, the first loss in the service-providing sector recorded by the ADP Report since November 2002.

In addition, employment among small-sized businesses — defined as those with fewer than 50 workers — declined 25,000. This is the first outright decline in small business employment reported by the ADP Report since November of 2002, and the largest percentage decline since the economy was emerging from recession in early 2002, according to Joel Prakken, chairman of Macroeconomic Advisers LLC, which helped ADP create the survey.

These discouraging reports come two days before the Department of Labor’s monthly unemployment report on Friday. And November is not exactly getting off to a great start, either.

GlaxoSmithKline Plc plans to cut about 1,000 U.S. sales jobs by the end of 2008 as part of a larger reorganization, according to Reuters.

Meanwhile, The Institute for Supply Management’s (ISM) manufacturing index fell to its lowest reading since October 2001, which was the month following the terrorist attacks.

The big question today, of course, is whether a Barack Obama presidency will be a positive or negative factor in dealing with the sliding trends. In his speech in Chicago late Tuesday, he made it clear that the rising unemployment rate was certainly on his mind, asserting, “There is new energy to harness and new jobs to be created.”