Banks may announce more job cuts
The financial sector saw more job cuts than other sectors in 2007 and should expect more to come, layoff report says.
NEW YORK (CNNMoney.com) -- Corporate profitability and the weak dollar in 2007 may have staved off job cuts in non-financial sectors, but big-name banks could announce more major layoffs this year, according to a report Thursday.
The falling dollar has led to high demand for U.S. exports, preventing the housing market slump from translating into widespread job cuts, Challenger, Gray & Christmas reported.
But the financial sector, which bore the brunt of the housing slump and credit crisis in 2007, saw record downsizing, with 153,105 layoffs announced last year, 31 percent more than the previous record set in 2001.
And even after waves of job cuts among the mortgage lenders and investment firms gambling on high-risk debt, Challenger expects the sector to continue to suffer.
"Job cuts in the financial sector declined in November and December, but major job-cut announcements may be on the horizon for Citigroup (C, Fortune 500) and Merrill Lynch (MER, Fortune 500)," said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.
"Furthermore, some experts are predicting that the credit crisis resulting from investments in subprime home loans will spread to those who invested in mounting consumer credit card debt," Challenger added.
Financial services companies were already among those making the biggest job cuts last year, according to Challenger research, with Citigroup announcing it will lay off about 17,000 employees and mortgage lender Countrywide Financial (CFC, Fortune 500) cutting 12,000 jobs.
Overall, 768,264 jobs were cut in 2007, 8.5 percent fewer than the cuts announced in 2006 and the lowest since 2000, Challenger reported.
Job cuts, at 44,416 for the month of December, were down by about 39 percent from November and down 18.7 percent from December a year ago.
After the financial services sector, the automotive industry saw the most layoffs in 2007, with 78,880 jobs cut.
Of those, 13,000 were layoffs at Chrysler amid the automaker's sale to private equity firm Cerberus Capital Management by its German partner Daimler (DAI).
"Depending on the outcome of the presidential election and the situation in Iraq and Afghanistan, the aerospace/defense industry could also begin cutting output and jobs," Challenger noted.
"Areas that should continue to offer strong job security are health care, business and professional services, global business, energy and technology sector firms, including telecommunications, computer and electronics," Challenger said.