There were two important reports on the U.S. economy released this morning. First, data from Challenger, Gray & Christmas showed that the total number of announced corporate layoffs in America rose by 38 percent in September to 44,324. The monthly uptick in separations was driven by the computer industry, the retail sector, and the education arena, with the latter resulting mainly from the collapse of the for-profit college ITT Technical Institute. Compared to this same period last year, the number of job cuts announced were 25 percent lower in September, and total corporate layoffs during the first nine months of 2016 are tracking 12 percent below the 2015 pace. Moreover, employers announced 121,858 job cuts in the third quarter of 2016, down 8 percent from Q2 and 41 percent lower than in the third quarter of 2015. John A. Challenger, chief executive officer of Challenger, Gray & Christmas, added that “It is not unusual to see a decreased job-cut activity in the third quarter, as many employers postpone major workforce decisions during the summer months. We could see a resurgence in cuts to close out the year. The fourth quarter is typically when companies make strategic moves to prepare for the coming year. This year could be particularly volatile in the fourth quarter, with employers holding off on significant moves until they see election results. It’s not simply who wins the White House, but there are Senate races and countless ballot initiatives on issues like minimum wages that will influence business strategies going forward.”
Elsewhere, data from the Department of Labor showed that the number of Americans making first-time claims for unemployment benefits totaled 249K in the week ending October 1st. That was a decrease of 5K from the prior week’s figure, better than economists had expected, and the second-lowest reading since 1973. This was also the 83rd weekly print below 300K in a row, one of the longest such streaks on record and a pattern believed to be consistent with an overall healthy labor market. Low demand for unemployment benefits does not really tell us a lot about what to expect from tomorrow’s big release of the September job report. However, initial jobless claims have been surprisingly stable this year, implying that any recent slowdown in the pace of nonfarm payrolls growth has been due more to a decline in hiring than an uptick in firing. With claims near multi-decade lows, though, there is probably not much room left for further declines, and a slight rise could even be expected as the economy inches closer to full-employment.
Sources: Econoday, Challenger, Gray & Christmas, U.S. DoL, FRBSLPost author: Charles Couch