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Economy in Brief

Challenger Layoffs Jumped
by Tom Moeller July 6, 2005

Job cut announcements jumped by more than one third in June and added to a sharp gain in May raising the level to the highest since January 2004. The three month average of job cut announcements also rose but just moderately.

During the last ten years there has been an 84% (inverse) correlation between the three month moving average of announced job cuts and the three month change payroll employment.

Job cut announcements in the automotive industry increased roughly ten-fold m/m. Outside of autos job cut announcement fell m/m (+6.6% y/y). In June job cuts did rise sharply in the retail and pharmaceutical industries.

Job cut announcements differ from layoffs. Many are achieved through attrition, early retirement or just never occur.

Challenger also reported that announced hiring plans improved sharply to the highest level since February.

Challenger, Gray & Christmas June May Y/Y 2004 2003 2002
Announced Job Cuts 110,996 82,283 72.5% 1,039,175 1,236,426 1,431,052
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