Summer Layoffs Continue to Climb, Led by Energy-Sector Cuts

Roy Maurer By Roy Maurer August 5, 2016
Summer Layoffs Continue to Climb, Led by Energy-Sector Cuts

U.S.-based employers announced layoffs of 45,346 workers in July 2016, a 19 percent increase from the previous month and the second consecutive increase in monthly job cuts since the summer began, according to global outplacement consultancy Challenger, Gray & Christmas.

While layoffs are trending up since May, the July total is 57 percent lower than one year ago, when job cuts rose to a four-year high of 105,696. That spike was due to budget-cutting initiatives in the military, said John A. Challenger, the consultancy's chief executive officer.

Restructuring was the reason given for the majority of job cuts last month.

To date, employers have announced 359,100 job cuts in 2016. That is down 8.7 percent from the 393,368 job cuts announced from January through July 2015.

"We did see a resurgence in energy-sector job cuts," Challenger said. "This was somewhat unexpected in light of recent projections of increased oil prices and possible labor shortages in the industry."

The energy sector accounted for 17,725 job cuts in July, a 796 percent increase from the previous month (1,979) and the largest job-cut tally for the industry since April, when the industry announced 18,759 job cuts.

So far in 2016, energy firms have announced 94,936 job cuts, 37 percent more than at this point a year ago, when layoffs in the industry totaled 69,550. The layoffs include 1,000 cuts at ConocoPhillips, or about 6 percent of the workforce.

Challenger cited industry figures that predict that oil and gas companies will have a difficult time renewing operations when oil and gas prices go up. "Not only have laid-off workers relocated to other areas for new jobs but, just as in many other industries, a large portion of the workforce is reaching retirement age."

The American Petroleum Institute indicated in a recent report that petrochemical companies will need to hire about 30,000 new workers each year over the next two decades to replace retiring employees.

After the energy sector, the computer industry reported the next highest number of layoffs this year. To date, these companies have accounted for 49,464 job cuts, including 9,875 in July. The year-to-date total is 94 percent higher than the seven-month total from 2015 (25,542).

On July 28, Microsoft announced it would cut 2,850 employees, mainly from its smartphone hardware business and global sales unit. The computer industry is volatile, Challenger said. "There are always winners and losers, so you see heavy cuts in that industry periodically."

Year-to-date, the retail (43,618), industrial goods (22,767), and financial (17,326) sectors round out the top five for number of layoffs. Texas leads the states in layoffs year-to-date (91,412), followed by California (51,422), Arkansas (18,944), North Carolina (17,051) and Illinois (15,290).



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