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First Cut: Challenger layoff intentions in July lowest in 11 months, but well ahead of 2018 for year-to-date

The Challenger report on announced layoff intentions declined 7.5% in July to 38,845 from 41,977 in June. However, the level was up 43.2% compared to 27,122 in August 2018. For 2019 to-date, layoff intentions have totaled 369,832, a significant increase from the 272,301 in the same period 2018.

While the labor market remains solid and hiring brisk, businesses are adjusting payrolls to match up better with a slower pace of economic growth. In particular, the two sectors with the largest numbers of layoffs in July reflect that manufacturing has slowed and that transportation of raw materials and finished goods has been affected. In July, transportation led with 5,532 layoff announcements, or 14.2% of the total. Industrial was second with 4,403 announcements, or 11.3% of the total.

The reasons given for layoffs was dominated by closing (10,634, or 27.4% of the total) and included continued contraction in the retail sector. The second most common reason given was restructuring (6,720, or 17.3% of the total). However, significant numbers also cited government regulation (4,500) and tariffs (1,053) which suggests the negative impacts of shortages of workers in jobs that are normally associated with immigrant labor, and that tariff policy is forcing some businesses to reduce workforces as activity slows.

Nonetheless, hiring intentions remain strong. There were 22,316 intentions announced in July, up 86.8% from the 11,946 in June, and a whopping 127.2% higher than 9,823 in July 2018. Even with the continued contraction in the retail sector, retailers announced plans to hire 8,515 workers. Excluding retail intentions, businesses planned to add 13,801 jobs. Intentions were strongest for pharmaceuticals (2,589), transportation (1,600), technology (1,501), healthcare (1,266), and automotive (1,303). These are all areas associated with higher wages and benefits and generally better job security. I also note that in spite of layoffs in transportation and automotive, there are jobs out there for at least some of those workers.

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