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Economy in Brief

Challenger Layoffs Up Sharply
by Tom Moeller October 3, 2006

For September, announced job cuts reported by Challenger, Grey & Christmas jumped for the second month. The 35,037 increase to 100,315 was to the highest level since January. The three month moving average of layoff announcements also rose 19.5% to its highest level since April.

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.

A sharply higher level of layoffs in automotive (464.2% y/y), commodities (77.2% y/y), consumer goods (9.5% y/y), industrial goods (-16.1% y/y), and insurance (396.0% y/y) boosted the total. These were offset by declines in retail (-82.7% y/y), financial (-26.5% y/y), real estate and transportation (-90.8% 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 more than tripled m/m (87.9% y/y).

Remarks by Fed Governor Randall S. Kroszner titled What Drives Productivity Growth? Implications for the Economy and Prospects for the Future can be found here.

Challenger, Gray & Christmas September August Y/Y 2005 2004 2003
Announced Job Cuts 100,315 65,278 39.6% 1,072,054 1,039,935 1,236,426
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