There were two important reports on the U.S. labor market released this morning. First, 53,480 corporate layoffs were announced in America in August, according to Challenger, Gray & Christmas. That was a 38 percent increase from July, the highest August total since 2009, and the 8th consecutive month of announced job cuts above the year-ago level. Moreover, there have been 423,312 planned layoffs year-to-date, a 36 percent increase over the January through August period in 2018 and the largest 8-month total since 2015. The retail sector continues to lead in terms of announced job cuts this year as store closures remain elevated due to the intensifying competition that brick-and-mortars face from online merchants (Amazon). However, the effects of the ongoing trade war are starting to increasingly show up as well, with “trade difficulties” cited as the reason for over 10,000 job cuts in August alone. The report’s authors added that “A number of industries are experiencing job cut announcements well above last year’s numbers, all in sectors related to Retail, Housing, Energy, Manufacturing, and Automotive. They also tend to be in sectors that are grappling with some sort of legislation, tariff, or regulation.”
Elsewhere, private-sector payrolls in America rose by 195K last month, according to new ADP data. That was a significantly larger increase than expected but July’s gain was revised slightly lower. Small businesses saw a sharp rebound in hiring in August, as firms with 1-49 workers added 66K payrolls last month. That was the largest gain since April and represented the highest share of monthly job creation since the start of the year. The snapback in hiring was not too surprising following several months of below-trend payrolls growth that has likely been exacerbated by the trade war. Indeed, essentially all of the recent weakness in the ADP employment figures has been concentrated among small manufacturers, whereas job creation at service-providing firms has held up extremely well. This makes sense due to small goods-producers’ relatively high exposure to, and low ability to cope with, tariffs and foreign trade volatility. The latest softness in manufacturing hiring also coincides with a rapid deterioration in sentiment in this sector that likely will not reverse anytime soon since additional tariff increases are still set to go into effect in October and December. A trade deal, though, could alleviate a lot of these problems and be especially beneficial for smaller companies that have already been struggling in recent years to fill vacancies as competing for talent in the tightening labor market has become more challenging.
Sources: Econoday, Challenger, Gray & Christmas, ADP, FRBSL