Pace of layoffs in first half of the year slowest since 2000

The six-month total is the lowest since 2000, when 223,421 jobs cuts were made between January and June.

Announced layoffs in May were up 2 percent, to 37,135, after falling to a four-month low of 36,490 in April. 

The increase in job cuts in May and June didn’t affect the overall slow pace of downsizing.  

The firm isn’t seeing much indication that job cuts will increase in the second half of the year. 

For the April-June quarter, a total of 115,057 job cuts were announced, down 12 percent from 130,749 in the first quarter and 1.2 percent lower than the 116,494 in the second quarter in 2010. 

“The employment picture remains a bit cloudy,” Challenger said.

“Continued slowness in the pace of job cuts is certainly promising,” he said. “However, hiring is coming in spurts and is not quite robust enough to make a significant dent in unemployment.” 

Although payrolls made gains in February, March and April, growth slowed in May, with only 54,000 jobs added and along with it a slight increase in the unemployment rate, to 9.1 percent. The Labor Department will release figures for June on Friday. 

“The next three or four months of employment and hiring data will be important indicators of whether the expansion has prematurely hit the brakes or if the dips in job creation are simply bumps on the road to recovery,” Challenger said.

The economy’s weakest link is the government sector, especially state and local governments that are cutting jobs to battle budget deficits.  

The sector, which has announced 77,591 job cuts so far this year, including an industry-leading 10,176 in June, is showing improvement from a year ago, the report showed. 

“If there is any silver lining, it is that the six-month total is down 22 percent from the 99,676 government job cuts announced by this point a year ago,” Challenger said. 

The retail sector ranked second, with 23,027 job cuts announced through June, which is 12 percent lower than the 26,181 job cuts in the first six months of 2010. 

Other industries continue to hamper the job market’s recovery, with the biggest increase in job cuts in the aerospace and defense industry, surging 241 percent, from 6,121 layoffs in 2010 to 20,851 this year.

Firms in the financial-services sector are downsizing, reporting 11,734 layoffs through the first six months of the year, an 18.5 percent increase over the 9,901 in the first six months of 2010.  

Job cuts in the industrial-goods sector are up 28 percent from a year ago, the report showed. 

“These are significant increases, but the job-cut totals are still low enough to prevent alarm bells from sounding,” Challenger said. “However, the fact that job cuts are rising in these particular industries is notable, since aerospace, financial services and industrial goods are all bellwether industries when it comes to the overall health of the economy.” 

The economy also is trying to replace far more jobs than in at least the past two recessions, according to the report. 

The 16-month-long downturn from July 1981 to November 1982 resulted in 2.7 million job losses, and it took about 11 months for employment to return to pre-recession levels.

Following the relatively short 2001 recession, there were about 2.7 million job losses, and it took nearly 40 months for payrolls to return to pre-recession levels.  

In the recession of 2008-09, more than 8.7 million jobs were lost, and about 24 months into the recovery, employment levels are still about 7 million jobs short of the pre-recession peak.

“Any progress made on the hiring front will appear anemic due to the fact that we started in such a deep hole,” Challenger said.   

“So, while we expect that employers will continue to steadily add jobs in the second half of 2011, at times it will appear that employment is standing still.”