Chicago, IL, July 6, 2006---Outplacement consultant Challenger, Gray & Christmas Inc. said its figures show that companies planned 67,176 job cuts in June, a 25 per cent increase from 53,716 in May. This is the first time in six months that the job cut number has gone up, it said.
This could be evidence of an economic slowdown, said chief executive officer John Challenger.
”Companies' costs are soaring, not only because of high energy prices, but also because of higher costs for raw materials and labour,” he said. ”Many companies are unable to pass along higher costs in this increasingly competitive global economy. These companies have no choice but to cut costs, which often means cutting payroll, closing plants or merging with a rival to reduce competition.”
The automotive industry announced the most job cuts in June, at 12,159. The second highest number came from industrial goods makers, at 7,565. Third was the financial industry at 7,292.
The main reasons employers gave for trimming employment in June were cost cutting and business closures.
Despite the jump in job-cut numbers in June, the overall level is still far lower than it was a year ago. In 2005 employers announced 110,996 cuts. And in the first six months of 2006, downsizing is 19 per cent lower than in the same period of 2005, Challenger Gray & Christmas reported.
Challenger noted that because unemployment is currently relatively low, companies are having trouble finding skilled workers. ” Employers may be inclined to hold onto the workers they have and shift to adding temporary workers until the status of the economy and inflation become clearer,” he said.
