More job cuts loom as economy slows

Tech and and auto industries lead the number of planned layoffs according to a monthly survey.

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By Kenneth Musante, CNNMoney.com staff writer

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NEW YORK (CNNMoney.com) -- The number of job cuts announced in September rose as the economy slowed, according to a report released Wednesday.

Positions on the cutting board rose 7.2% to 95,094 from 88,736 the previous month, and were 33% higher than the same month last year, when 71,739 cuts were announced, according to outplacement consultancy Challenger, Gray & Christmas, Inc.

September brought the announced layoff total for the third quarter to 287,142 - the largest number since 2005, according to the report.

The computer industry was the hardest hit, with 25,715 positions on the line after PC maker Hewlett-Packard (HPQ, Fortune 500) announced the largest workforce reduction of the year, the report said.

HP said it would cut 24,600 jobs worldwide as a result of its acquisition of Electronic Data Systems Corp. But since those cuts were a result of the deal and not a consequence of the ailing economy, the report noted, HP's workforce could gain many of those jobs back.

The struggling auto industry came in second place, with plans to drop 14,595 jobs, while the apparel industry came in third place, announcing 8,350 cuts, according to the report.

Surprisingly, planned job cuts were relatively modest in the financial sector, the report said, despite the turmoil that plagued the nation's financial institutions during the month.

Banks wait for bailout

The data showed that finance industry had announced 8,244 job cuts in September, compared with a spike of 27,169 during the same month last year as the credit crunch began to unfold. But they did jump from 2,182 in August.

September saw a major reshaping of the financial landscape as institutions such as Lehman Brothers, Merrill Lynch (MER, Fortune 500), AIG (AIG, Fortune 500), Wachovia (WB, Fortune 500) and Washington Mutual were acquired, bailed out, or went bankrupt.

"While all of these scenarios are being played out, the fate of the workers remains in limbo," John A. Challenger, chief executive of Challenger, Gray & Christmas said in a statement.

Financial institutions are waiting to see if Congress passes the Bush administration's $700 billion rescue plan that would allow the government to buy up tainted assets in order to keep their businesses from failing.

Whether the bailout plan is approved by Congress - and what form it takes - will affect the number of layoffs that may eventually be announced, according to Challenger.

"One of the big questions is: Are there going to be more runs on banks and financial institutions?'" he told CNNMoney.com.

If there is no bailout plan, financial job cuts will likely increase, according to Challenger. On the other hand, if all banks take advantage of the government's offer, the number of layoffs could be limited, since no one institution is singled out.

But if a bailout plan passes and is only embraced by a few institutions, that would emphasize the weakness of those companies, and we might see more job cuts, he added. To top of page

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