NEW YORK (CNN/Money) - Employers announced fewer layoffs in January than they had in the previous four months, according to a job placement firm that tracks the staff cuts.

But the monthly report from outplacement firm Challenger, Grey & Christmas warned that a recent rush of corporate mergers could fuel a new round of job cuts in the months ahead.

The report shows 92,351 job cuts in January, the first time the total was below the 100,000 level since August, when 74,150 cuts were announced. The survey also showed more hiring announcements by employers in January, with the month seeing plans to add 29,832 jobs, up 40 percent from 21,262 in December.

Those numbers suggest that the labor market could be showing signs of strength this year, said firm CEO John Challenger.

"Job cutting in general continues to trend downward," said Challenger in the firm's statement. "January is typically one of the heaviest job-cut months of the year. The fact that job cuts declined from December and January 2004, is a sign of job market improvement, bolstered further by announced plans to add nearly 30,000 jobs."

Still Challenger said the expected pickup in merger and acquisitions this year is a negative factor for employment, even with an improving labor market.

"Merger activity is starting to accelerate in many industries. On Monday alone there were at least three major deals announced, including the mega-merger between SBC (Research) and AT&T (Research), which is likely to result in significant job cuts," he noted.

"Merger/acquisition activity was the second leading cause of job cuts last month, behind cost-cutting. It will continue to be among the top job-cut reasons this year as an improving economy and increased competition force industry consolidation."

SBC waited until Tuesday to announce that it expected to cut about 10,200 jobs as a result of its purchase of AT&T, so the number is not included in the Challenger January report.

But included in the report was Friday's announcement by consumer products companies Procter & Gamble (Research) and Gillette (Research) that they expected to eliminate 6,000 jobs as result of P&G's $57 billion purchase of the leading razor company.

More than one-third of the January job cut announcements were concentrated in three industries, according to the report, with the government and non-profit sector shaving 11,556 jobs, financial services trimming 11,220 and the automotive industry announcing cuts of 10,537 positions.

The report comes ahead of Friday's Labor Department report on January employment levels. Economists surveyed by Briefing.com forecast that report will show an addition of 200,000 jobs to U.S. payrolls, up from 157,000 jobs added in December, while the unemployment rate is forecast to stay unchanged at 5.4 percent.