NEW YORK – U.S. job cut announcements jumped 65 percent to a record level in July, led by telecommunications, computer, electronic and industrial companies, a report by outplacement firm Challenger, Gray & Christmas, Inc. said on Monday.
Announced job cuts in July hit 205,975, up from 124,852 in June. July's total was more than three times the level of job cuts recorded in the same month last year, the report said.
``Job cuts tell us as much about the economy's future as they do about the present. Companies are looking at their staffing needs for the balance of 2001 and the numbers do not present a very positive picture,'' said John Challenger, chief executive of Challenger, Gray & Christmas. The survey began in 1993.
For the first half of 2001, U.S. companies said they planned to cut 777,362 jobs, more than three times the number announced during the first six months of last year.
The telecom sector overtook the technology sector in July in recording the highest number of job-cut announcements. With 44,908 jobs cuts announced in July, the total number of layoffs announced in the sector hit 175,350 for the first seven months this year.
Technology companies announced 26,321 layoffs in July bringing the total to 101,044 for the year to date.
Mobile phone company Ericsson announced up to 22,000 job cuts in July and telecom equipment manufacturer Lucent said it plans to lay off between 15,000 and 20,000 employees this month.
``This is a very very big surge in layoffs. Basically it says two things: One is that the employment situation is not going to turn around in the near future and will continue to get worse during summer months. It also means that (benefits) claims will edge higher,'' said Eric Green, chief economist with BNP Paribas.
``But it does not mean much for the market. Everyone knows the labor market is weak and will continue to get weaker in the coming months,'' he added.
On Friday, the Labor Department said the number of nonfarm jobs declined by 42,000 in July. But the unemployment rate held steady at 4.5 percent.
July's Challenger data was the sixth time in the past seven months that job cut announcements totaled more than 100,000.
The market reaction to the Challenger report was minor, with Treasuries ticking higher.
``We moved up a little but the impact was limited because it came after Friday's jobs report,'' said Ray Remy, head of government bond trading at HSBC Securities.