The Challenger report on layoff intentions reached a record one-month high of 671,120 in April after the surge of 222,228 in March. The level was up 201.9% compared to the prior month and 1576.9% over the 40,023 in April 2019. The overwhelming cause of the surge in layoff intentions was the response to the COVID-19 pandemic. As the report noted, most employers would like to bring workers back on payrolls as soon as feasible, but conditions are highly uncertain. For now, the vast majority of layoffs are intended to be temporary. That could change if the economic downturn proves more lasting that anticipated even if it is expected to be deep.
As would be expected in the current circumstances, layoffs are in nonessential service industries which involve high levels of public contact and where the work cannot be performed from home. The largest declines were in entertainment/leisure (318,310 or 47.4% of the total) and retail (84,502, or 12.6% of the total).
The reasons cited for layoffs in April was nearly all laid at the door of COVID-19 (633,082, or 94.3% of the total). The next largest was in market conditions (16,873, or 2.5% of the total) which might also be related to the pandemic. I note that some businesses cited the oil price downturn as a reason (10,041, or 1.5% of the total). In normal times this would be a significant cut for the sector, but the importance may be more evident later if energy prices remain depressed for any length of time.
There actually were a large number of hiring intentions in April. The total of 285,639 was largely due to the transportation sector (251,200, or 87.9% of the total) and retail (30,100, or 10.5% of the total). Given the intense demand for delivery services at present, this should not be a surprise. It would also not be a surprise if many of these workers were retained after the immediate crisis has passed as consumers are more cautious about activity outside the home. Otherwise, hiring intentions are moribund until the economic outlook is improved and less uncertain.
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