February Job Cuts Plummet to Lowest Level Since December 2019

The outplacement firm of Challenger, Gray & Christmas on Thursday reported that U.S. firms announced 34,531 job cuts in February, a drop of 57% compared to cuts announced in January. The monthly total was the lowest since December 2019, when U.S. employers announced 32,843 job cuts.

January’s total of 79,552 announced job cuts was the highest January level since more than 240,000 job cuts were announced in 2009.

February’s announced cuts were 39% lower than the 56,660 cuts announced in February 2020. For the year to date, employers have announced 114,083 job cuts, 8% fewer than in the same period last year. For all of 2020, more than 2.3 million job cuts were announced, nearly four times the 592,556 jobs lost in all of 2019.

Andrew Challenger, vice president of the outplacement firm, noted that “[t]he churn has come to a halt. If healthy job creation follows, this could mean a full recovery is on the horizon, especially as companies see an end to the pandemic in sight.”

Nearly half of the 2.3 million job cuts announced in 2020 were directly attributed to the COVID-19 pandemic. In February, just 1,197 were attributed to the pandemic, bringing the year-to-date total to 5,817.

Industry sectors hit hardest in February were retail (9,257 announced cuts), energy (3,736 announced job cuts) and insurance (3,128 cuts). In the first two months of 2021, job cuts have been highest in aerospace/defense (30,826), telecommunications (19,002) and retail (10,616).

On the other side of the ledger, U.S. firms in February announced plans last month to hire 146,403 new workers. The majority of those planned jobs (66,486) came from the retail sector.

Missouri-based employers announced the most job cuts in February, with 6,415 planned cuts. California (5,715 cuts), Minnesota (5,343), Massachusetts (2,341) and New York (2,027) round out the five states losing the most jobs last month. Missouri is home to a health insurer (Centene) that announced plans to eliminate 4,500 jobs and job openings early in the month.

Wednesday morning, ADP reported that private-sector payrolls increased month over month in February by 117,000, well short of the consensus expectation for a gain of 165,000. The weekly report on new claims for unemployment benefits due out later Thursday morning estimates 760,000 new claims were filed in the week ending February 27. The monthly employment situation is due Friday morning, and analysts expect nonfarm payrolls to rise by 175,000 and the unemployment rate for February to remain unchanged at 6.3%.

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