Jobs take a beating
An outplacement firm reports that October job cuts by U.S. employers rose by the highest amount since January 2004. Payroll manager ADP's toll: 157,000 cut.
NEW YORK (CNNMoney.com) -- October was another awful month for jobs. Two key employment reports released Wednesday showed the largest number of planned job cuts in nearly five years, with private sector jobs falling by the largest amount in nearly seven years.
Job cut announcements by U.S. employers soared to 112,884 in October, up 19% from September's 95,094 cuts, according to outplacement firm Challenger, Gray & Christmas Inc. That was the highest number of pink slips handed out since January 2004. Layoffs last month were up 79% from October 2007, when 63,114 job cuts were announced.
Separately, payroll manager ADP said Wednesday that the private sector lost a seasonally adjusted 157,000 jobs last month - more than six times September's decrease and the largest drop since December 2001.
The dour reports were ominous signs for the jobs market ahead of the Department of Labor's monthly unemployment report on Friday. That report is expected to show that 200,000 jobs were lost in October and that the unemployment rate grew to 6.3% from 6.1% a month earlier.
"The economy has taken a marked turn for the worse, so it's hard to envision a scenario where we don't see steep job losses in the next few months," said Dean Baker, co-director of the Center for Economic and Policy Research. "In the best-case scenario, jobs will stabilize by the middle of 2009."
October's numbers bring the total number of planned job cuts to 875,974 in 2008, 14% higher than all of 2007 and the largest 10-month total since 2003.
The embattled financial and automaking industries were hit the hardest, as they have been all year. The struggling industries have seen a combined 239,760 layoffs so far this year, representing 27% of all layoffs in 2008.
With a Wall Street credit crisis leading the economy into a likely recession, 17,949 financial sector jobs were lost in October. The automotive industry cut 15,692 jobs last month. Low consumer confidence and high gas prices during the spring and summer have led to historically low sales of automobiles around the globe, especially for trucks and SUVs.
On Monday, the Institute for Supply Management's manufacturing index fell to its lowest reading since October 2001. Tuesday, auto sales tracker Autodata reported that the seasonally-adjusted annual auto sales rate plunged to its worst reading since February 1983.
"The weakness in this week's manufacturing and auto sales reports was amazing," said Baker. "That could push Friday's unemployment number as high as 250,000 [lost jobs]."
Of the 25 industry categories that the Challenger report tracks, 18 reported higher job cuts in October. The manufacturing, consumer products, pharmaceutical, food and electronics industries all reported that October yielded the highest level of job cuts so far in 2008.
"The fact that nearly three out of four industry categories are cutting more jobs is proof of how widely the impact of this downturn has spread," said John Challenger, chief executive of Challenger, in a statement. "Even if the economy begins to rebound in the spring or summer, it could be months before we start to see net gains in employment and a decline in the unemployment rate."
The ADP report showed that private sector jobs fell by the largest number in nearly seven years, dragged down by the weak manufacturing and goods-producing sectors.
The decline of 157,000 jobs was worse than the consensus view of economists, surveyed by Briefing.com, who had expected a loss of 100,000 jobs. Unemployment has been trending higher since January, and ADP reported the lowest total nonfarm private payroll level since October 2007. The company said it does not expect job losses to let up anytime soon.
"It would not surprise me at all to see many more declines in employment in the near-future," said ADP spokesman Joel Prakken in a conference call with reporters.
Prakken said he didn't anticipate a turnaround for these numbers until the second half of next year, and added that it was "highly likely" that unemployment numbers will be in excess of 200,000 job losses per month for the next several months.
Last month's decline was led by a drop of 126,000 goods-producing jobs, 85,000 fewer manufacturing jobs and 45,000 fewer construction jobs. Service sector jobs declined by 31,000, the first reported drop in the traditionally strong industry since November 2002.
Companies with 500 or more workers shed 41,000 jobs in October, and companies with between 50 and 499 employees reported a net loss of 91,000 jobs. Businesses with fewer than 50 employees lost 25,000 positions, marking the first reported decline in small business employment since November 2002.
The data used in the ADP National Employment Report was taken from ADP payroll data which averaged 500,000 payrolls for 24 million U.S. employees.
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