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First Cut: Challenger Report reflects continued contraction in brick-and-mortar retail in January

The Challenger Report said there were job cut announcements totaling 52,988 in January, a 20.7% rise from December and up 18.7% from a year-ago. Not surprisingly, the cuts were dominated by the retail sector (22,327 or about 42% of the total). January often sees large numbers of reductions for the retail space in the post-holiday period. This year is particularly sharp given the on-going contraction in brick-and-mortar outlets.

This presents a certain irony in that retail continues to see large numbers of hiring intentions. Those retail chains and specialty stores that have adapted in the transition to the rising appeal of on-line shopping are doing reasonably well. There were 74,040 hiring intentions announced in January, a 362.8% increase over December and up 76.7% from a year-ago. Close to 90% of this was from a single announcement by Lowe’s that it intended to hire 50,000 seasonal workers to meet the usual spring boom. However, the announcement included another 10,000 permanent floor jobs and 6,000 managers. Also unusual for a January, the transportation sector had 3,000 announcements that indicates continued demand that is likely for delivery services for on-line shopping and drivers for shipping firms.

The reasons given for job cuts were a little more diverse than in recent months but are mainly related to the retail sector. Of the 52,988 cuts announced, the largest were in bankruptcy (19,984), restructuring (10,055), closing (7,492) and cost-cutting (6,968). There was not much indication of impacts directly related to trade and tariff policy. Nonetheless, there were a few hints in categories like contract loss (2,549), relocation (253), relocation overseas (160), and financial losses (65). Surveys of activity for manufacturing and service businesses have indicated increased costs and challenges along the supply chain, and decisions forced on them by these pressures.

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