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First Cut: Challenger layoff activity slower in February from January while structuring continues

The Challenger report on layoff intentions for February had a 16.4% decline to 56,660 after 67,735 in January and was down 26.3% from 76,835 in February 2019. Layoff activity continued to be dominated by restructuring in technology and retail.

Layoff intentions of 10,218 in technology accounted for 18.0% of the February total while retail layoffs of 8,096 accounted for 14.3% of all layoffs announced.  Together these were nearly a third of all planned job cuts.

It is important to remember that layoff intentions announced in a particular month may include cutting unfilled positions, or be for plans that extend into months — even years. So current large numbers of cuts may not translate into an immediate uptick in workers reentering the job market. However, that may not be the case for the February report where large numbers of closures in retail are going to be fairly quick or technology where restructuring is going to be prompt. The good news is that demand for workers in these sectors will mean those laid off are likely to be rapidly absorbed back into the numbers of the employed.

The majority of reasons cited for layoff intentions — two-thirds — were in two categories. There were 19,232 announcements due to closing or 33.9% of the total, and 18,157 in restructuring or 32.0% of the total.

Hiring intentions were softer outside of the retail sector which is preparing for spring at outlets for outdoor goods for gardening and home maintenance. In February, a single announcement from Home Depot of 80,000 was the same as the total for retail. Other chains like Lowe’s may be holding off on making an announcement in the face of the COVID-19 spread and concerns about actual foot traffic stores. For intentions other than retail, the total was 8,202 and reflected solid intentions in energy of 3,000 and 1,750 in automotive.

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