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First Cut: December Challenger Job Cut Report has modest year-end layoff activity

The December Challenger Report on layoff intentions showed levels typical at year-end. The monthly total was 43,884, down 17.3% from the 53,073 in November, but up 35.3% from 32,423 in December 2017. For December, layoffs were scattered across industries. The largest announcements were in services (6,352), pharmaceutical (5,135), and healthcare (4,665), all of which often adjust payroll costs at year-end.

The reasons given for layoffs were also typical of year-end at 43,884 in total on decisions to merge and acquire businesses (8,616) and consolidate (30), restructure (7,490), and close nonprofitable outlets (8,693).

For 2018 as a whole, there were 538,659 layoff intentions announced compared to 418,770 in 2017. The year total was the highest since 598,510 in 2015 when contraction in the energy sector led to large numbers of layoffs, as well as in government and industrial goods. However, in 2018, it was the retail sector that mainly drove up the total due to widespread closures of brick-and-mortar stores for department and specialty chains, and some grocery chains. There were also impacts from trade and tariff policy that led to some restructuring and relocation for the auto sector.

In the end, 2018 remained a healthy one in terms of historical context for layoffs. It is certainly typical of the average number of layoffs for a year in the post-recession period (average 526,053 for 2010-2018).

Hiring intentions in December were 15,999, up 3.7% from the prior month and 94.7% from 8,218 in December 2017. The number was solid even excluding the retail component (2,500) which has contributed outsized gains much of the year. The tight labor market and solid economic growth continue to encourage hiring. The largest increases for December were in automotive (3,275) and computer (2,629), both of which are associated with higher wages and benefits.

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