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Economy in Brief

Challenger Layoffs Up Again in October, Trend Lower
by Tom Moeller November 7, 2005

Last week, Challenger, Grey & Christmas reported that job cut announcements in October rose for the second consecutive month. The 13.2% m/m rise to 81,301 nevertheless left the three month average of job cut announcements down 8.8% at 74,569 (-21.2% y/y), the lowest level since August of last year.

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

Increases in job cut announcements m/m were reported in apparel (65.5% y/y), automotive (11.5% y/y), insurance (272.2% y/y) and telecommunications (-28.5% y/y) pharmaceutical (37.0% y/y) industries although declines were noted in consumer goods (-45.0% y/y), electronics (-48.3% y/y), financial (-78.2% y/y) and retail (+118.0% y/y).

Challenger also reported that announced hiring plans also rose to a level up sharply from last October.

The Yield Curve as a Leading Indicator: Frequently Asked Questions answered by the Federal Reserve Bank of New York is available here.

Last week's comments from Federal Reserve Board Vice Chairman Roger W. Ferguson, Jr. at the Cato Institute titled Monetary Credibility, Inflation, and Economic Growth can be found here.

Challenger, Gray & Christmas Oct Sept Y/Y 2004 2003 2002
Announced Job Cuts 81,301 71,836 -20.2% 1,039,175 1,236,426 1,431,052
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