A flurry of corporate layoffs in recent days has offered readers the latest reminder that the economic recovery continues to wane, and many of these layoffs won’t be counted in time to be reflected in the pre-election day job numbers.
For more troubling news on the rapid deterioration in the employment space, outplacement firm Challenger, Gray & Christmas released a new report Thursday announcing 118,804 job cuts in September, with the majority of reductions seen in bars, restaurants, hotels, and amusement parks, reported Reuters.
September’s job cuts increased by 2.6% from 115,762 in August to 118,762 in September. Total job cuts for the year are around 2.082 million, surpassing the previous record of 1.957 million in 2001. There was some good news, job cuts in the third quarter totaled 497,215, down 59.8% from the second quarter.
“We are beginning to see cuts spread to sectors outside Entertainment and Retail,” Andrew Challenger, the firm’s senior vice president, said in a statement.
The layoff wave comes as companies have burned through government loans to support operations and pay wages. Stimulus funding ended nearly two months ago. Some economists have warned, the weakening labor market and stalling recovery could result in a double-dip recession without a second round of stimulus (read: here).
Challenger said, “especially if another relief package fails to pass, employers are going to enter the fourth quarter, hesitant to invest or spend.”
This week, Royal Dutch Shell, Continental Airlines, Dow Chemicals, Marathon Petroleum, and Goldman Sachs have announced restructuring plans that involve laying off tens of thousands of workers. Yesterday, Disney announced plans to eliminate 28,000 jobs as most of its theme parks remain closed, and the movie business remains effectively shuttered.
Challenger’s report showed 32,099 job cuts at bars, restaurants, hotels, and amusement parks in September. The aerospace/defense industry announced 18,971 layoffs last month, following 16,628 cuts in the transportation sector.
“The employment landscape is dealing with a host of burdens that reach beyond job cuts. COVID-19 and the recession continue to cause volatile conditions in many industries,” he said.
Job cuts spreading across major industries is not a sign of a robust economic recovery. US main equity futures on Thursday morning ignored the report as hopes for more stimulus lift E-mini S&P500 futures nearly 1%.
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