May Job Cuts Remain Low; Down 94% Year Over Year

The outplacement firm of Challenger, Gray & Christmas on Thursday reported that U.S. firms announced 24,586 job cuts in May, a drop of 93.8% compared to the 397,016 cuts announced in May 2020. The total rose by 7% month over month, following an increase of 25% in April.

March of last year marked the beginning of the massive job cuts related to the COVID-19 pandemic. A total of 222,288 job cuts were announced that month, followed by 671,129 cuts announced in April. The five-month total last year was 1.41 million cuts.

In contrast, job cuts announced for the first five months of this year totaled 192,185, a decline of 86% year over year. For all of 2020, more than 2.3 million job cuts were announced, almost three times the 592,556 jobs lost in all of 2019.

Andrew Challenger, vice president of the outplacement firm, noted, “Many employers, especially those hit hard during the pandemic, such as Retailers and Hospitality and Leisure companies, are having a difficult time finding workers. Many are offering signing bonuses or higher wages to attract workers. As the labor market tightens, as is typical, workers may find employers offering more attractive perks and benefits, including higher starting wages, as they look for positions.”

Nearly half of the 2.3 million job cuts announced in 2020 were directly attributed to the COVID-19 pandemic. In May 2021, 686 were attributed to the pandemic, bringing the year-to-date total to 7,608.

Industry sectors hit hardest in May were health care/products (2,775 announced cuts), education (2,617) and transportation (2,285). In the first five months of 2021, job cuts have been highest in aerospace/defense (32,779), telecommunications (24,824) and services (16,608).

On the other side of the ledger, U.S. firms in May announced plans last month to hire 49,118 new workers. In the first five months of this year, employers have announced plans to hire a total of 441,696 new employees. That’s a year-over-year decline of 65% from the same period a year ago. In May of 2020, employers announced plans to hire 39,981, bringing the year-to-date total to 1.26 million.

California-based employers announced the most job cuts in May with 4,647 planned cuts. Illinois (2,417), Texas (2,039), Pennsylvania (1,702) and New Jersey (1,661) round out the five states losing the most jobs last month.

Thursday morning, ADP reported that private-sector payrolls increased month over month in May by 978,000, well above the consensus expectation for a gain of 675,000. The weekly report on new claims for unemployment benefits, also released Thursday morning, reported 385,000 new claims were filed in the week ending May 29, below the consensus estimate of 400,000. The monthly employment situation is due Friday morning, and analysts expect nonfarm payrolls to rise by 645,000 month over month and the unemployment rate for May to drop from 6.1% to 5.9%.

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