Challenger: Planned Job Cuts Surge in May

Planned layoffs in the United States jumped 42 percent in May from April, led by hefty job cuts in the computer industry as a result of slow growth in the European economy, outplacement firm Challenger, Gray & Christmas said Thursday.

Challenger, Gray & Christmas Inc. (search) said employers announced 82,283 job cuts in May, up from 57,861 in April, and up 12 percent from May 2004.

Computer companies announced 17,886 job cuts in May, eight times higher than April's level and accounting for more than one-fifth of all job cuts in May, Challenger said.

"The surge in computer industry job cuts does suggest that there are some problems in the economy. A major factor behind May computer (job) cuts was weakness in the European economy," Challenger said in a statement.

The May jump in announced job cuts is the latest evidence that U.S. employment growth may be slowing.

Earlier Thursday, the government reported that initial claims for jobless benefits totaled 350,000 for the week ending May 21, compared with the prior week's 325,000, which was revised up from the 323,000 reported last week.

May U.S. nonfarm payroll data (search) are due to be released on Friday. Analysts polled by Reuters on average foresee creation of 185,000 jobs, sharply down from April's 274,000 increase.

"With so many question marks in this economy, employers appear to be in a holding pattern. More companies are retaining their workers, but they seem reluctant to add workers," Challenger said in a statement.

If announced layoffs do not fall this summer, which is historically the slow period each year for layoffs, "then it might be time to be concerned about the economy's strength," John Challenger, the firm's chief executive, said.