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Economy in Brief

Challenger Layoffs Back Up
by Tom Moeller September 5, 2006

Announced job cuts in August, reported by Challenger, Grey & Christmas, reversed nearly all of a whopping July decline. The 28,100 increase to 65,278 pulled the three month moving average up 7.3% but it was still 40.4% than last year.

During the last ten years there has been an 83% (inverse) correlation between the three month moving average level of announced job cuts and the three month change payroll employment.

Layoffs rose sharply m/m in the automotive (83.9% y/y), consumer goods (42.2% y/y), electronics (-72.9% y/y), and retail (107.0 % y/y) industries but fell in financial (-21.3% y/y), services (-73.3% y/y) and telecommunications (-77.3% y/y).

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

Challenger also reported that announced hiring plans dropped sharply m/m (-73.6% y/y).

Remarks by Fed Chairman Ben S. Bernanke in South Carolina on Friday can be found here.

Challenger, Gray & Christmas August July Y/Y 2005 2004 2003
Announced Job Cuts 65,278 37,178 -7.5% 1,072,054 1,039,935 1,236,426
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