Phew! Employers cut fewer jobs in October than expected.
Announced layoffs by governments and businesses, at 42,759, were the fewest since June, says a new report. That's a big improvement over September's 155,730 job losses.
In a positive sign for the US economy, governments and businesses did not cut jobs in October nearly as much as they had initially planned.Skip to next paragraph
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At the same time, companies have announced many more hiring plans than layoffs, as they gear up for the holiday season, according to Challenger, Gray & Christmas, a Chicago-based outplacement company.
Economists view the news as an indication that the US economy may be getting over the shocks of the past summer, when Congress and President Obama engaged in a stare-down over the debt ceiling limit and the stock market fell sharply. The hiatus in layoffs is also related to the fact many state and local governments made their big cuts this summer and are no longer axing workers.
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"What the numbers had showed is that companies got worried over the summer and took immediate action, and now that they are less worried, layoffs are back to where they had been,” says Joel Naroff of Naroff Economic Advisors in Holland, Pa.
According to Challenger, planned job cuts fell 63 percent from September, which had been the highest in at least two years. Announced job cuts came to 42,759, the lowest number since June and a sharp drop from the 155,730 in September.
The Challenger report comes two days before the Labor Department announces the October unemployment numbers. Wall Street economists expect job gains of 130,000 to 140,000 in October. The unemployment rate is expected to remain close to 9 percent.
In September, the economy added only 103,000 new jobs, and the unemployment rate was 9.1 percent.
Separately, ADP, a payroll processing firm, said Wednesday its monthly survey found that private employers added about 110,000 jobs in October. The report suggests hiring remains only “moderate,” and is probably below the pace needed for a stable unemployment rate, the firm said.
Also, the Labor Department reported Wednesday that jobless rates were lower in September in 249 of 372 metro areas. That means unemployment was higher in 102 metro areas and unchanged in 21. Seven metro areas had unemployment rates of 15 percent or higher, and 17 had rates of less than 5 percent.
The largest declines came in Farmington, N.M. (down 2.6 percentage points); Muskegon-Norton Shores, Mich. (down 2.3 percentage points), and Steubenville, Ohio-Weirton, W.Va. (also down 2.3 percentage points).
Although the Challenger report found some improvement in the government and finance sectors in October, for the entire year the two sectors are the top job-cutters. According to John Challenger, CEO of the firm, the two sectors remain the most at risk in the future.
“Most of the government cuts this year were at the state level,” said Mr. Challenger, in a press release. “We have yet to see the full impact of mandated federal spending cuts.”
For example, he said, the US Postal Service alone may cut as many as 200,000 jobs. At the same time, the US government may be forced to make mandatory cuts across the board if a congressional "super" committee does not come up with an acceptable plan to pare the federal budget deficit by $1.2 trillion over the next 10 years.
Jobs on Wall Street are also likely to decline in the months ahead, as banks grapple with the effect of the European debt crisis on their balance sheets. In addition, thousands of workers lost their jobs this week when MF Global declared bankruptcy as a result of losing money on its investments in European bonds.
“The European debt crisis is wreaking havoc on Wall Street,” said Challenger.