Layoffs Reach 11-Month High, But They're Not The Major Worry
The number of planned layoffs in February rose to an 11-month high according to data released Tuesday, but economists think it's too soon to say whether this is indicative of a broader slump in the labor market.
According to a separate survey released Wednesday -- the ADP National Employment Report -- private-sector payrolls added 217,000 jobs in February.
Layoffs rose to 50,702 in February, according to outplacement firm Challenger, Gray & Christmas, a 20 percent increase over the same period last year.
Taken together with the ADP numbers, the picture painted by Challenger's layoff report is not so bleak. But the ADP numbers have diverged widely from official job data for the past several months. In January, ADP reported an increase of 187,000 private sector jobs. The BLS reported only 36,000 new positions, public and private sector. (On Friday, the Bureau of Labor Statistics will release the government's official unemployment report for February.)
Additionally, there's reason to believe February's layoff surge, while disturbing, may not be that bad.
"Even if the job market was humming right now like it was in 2007 you're still going to see layoffs every month," said Wells Fargo economist Jay Bryson. "When you look at the total number of jobs lost relative to where we were in 2009, these numbers are very low right now."
In May 2009, the last month there was a year-over-year increase, 111,182 jobs were lost.
"There's an issue with the labor market right now, but it's not layoffs," Bryson said. "The issue is, at least up to this point, many businesses have not started to hire folks."
In his firm's report, CEO John A. Challenger said that while it was too soon to say whether the increase in layoffs in January represents a trend, rising oil prices could prove to be a looming challenge in the labor market.
"Certainly the specter of rising gas prices could impact employers' staffing decisions over the next six months," Challenger said. "At the very least, rising energy costs could force employers to postpone hiring plans. At worse, increased costs could kill the fragile recovery and spur another round of layoffs."