There were two important reports on the U.S. labor market released this morning. First, 41,977 corporate layoffs were announced in America in June, according to Challenger, Gray & Christmas. That was a 28 percent decline from May but still 13 percent higher compared to this same period last year. Moreover, 330,987 job cuts have been announced year-to-date, a 35 percent increase compared to the first six months of 2018 and the highest H1 total since 2009. The retail sector is leading in terms of announced layoffs this year as store closures remain elevated due to the intensifying competition that brick-and-mortars face from online merchants (Amazon). Also of note, compared to 2018 job cuts have spiked in the goods-producing arena, which the report’s authors attribute to “technological changes, increased competition, tariffs, changes in consumer behavior, and skills shortages.”
Elsewhere, private-sector payrolls in America rose by 102K last month, according to new ADP data. That was a smaller rebound than expected but May’s paltry 27K gain was revised higher to 41K. Small businesses remained the largest drag on headline payrolls growth last month, as firms with 1-49 workers reported a net loss of 23K employees in June. That was the first time since 2010 that small businesses have experienced two consecutive months of staff reductions. These companies have already been struggling in recent years to fill vacancies as competing for talent in the tightening labor market has become more challenging. However, the rapid deterioration seen in May and June likely had more to do with the latest escalation in the trade war than a broader slowdown in the overall economy because essentially all of the weakness in the past two months has been concentrated among small manufacturers, whereas job creation at service-providing firms has held up rather well.
Sources: Econoday, ADP, Challenger, Gray & Christmas
Post author: Charles Couch