December job cuts top 100K

Challenger survey: Deepest cuts since January lifts '04 total past 1M; better '05 outlook seen.

January 5, 2005: 10:24 AM EST

NEW YORK (CNN/Money) - U.S. employers ended the year announcing more than 100,000 job cuts in December, according to a survey of layoff notices, but the firm that tracks the downsizing sees a stronger employment outlook ahead.

Job search firm Challenger, Gray and Christmas says 109,045 job cuts announced in December is the highest since the 117,556 cuts announced in January. It also marked the first time that there have been four straight months of 100,000-plus job cuts since the first four months of 2002.

"The heavy year-end downsizing does not necessarily indicate a sudden weakening of the economy," said John Challenger, CEO of the firm. "The fact is, job cutting has become a permanent part of the corporate cost-management mix, as demonstrated by the fact that a strong financial sector still found nearly 100,000 jobs to eliminate."

The December cuts lifted the 2004 total to just over 1 million, the fourth straight year it has topped that mark. But total cuts were down from the 1.2 million job cut announcements in 2003 and 1.5 million positions cut in 2002. The number of cuts are down nearly 50 percent from the record 1.96 million cuts announced in 2001.

Challenger said job cuts are likely to decrease once again in 2005.

"Jobs are finally being created at a steady rate and many of those jobs are in higher-paying occupations," he said. "Consumer buying was strong during the holidays and is expected to remain strong. Meanwhile, business is starting to increase capital expenditures on new technology and infrastructure."

Still the annual job cuts are still well above levels during much of the 1990s, when the employment picture was exceptionally strong. Challenger said between 1993 and 2000, annual job cuts averaged 556,190.

Tuesday's report from Challenger comes ahead of Friday's December employment report from the Labor Department.

Economists surveyed by Briefing.com forecast that report will show U.S. employers added a net gain of 175,000 jobs in the month, up from the disappointing 112,000 jobs added in November. Reuters found a range of estimates from 130,000 new jobs to 250,000 new jobs. The unemployment rate is forecast to stay at 5.4 percent.

In May, the firm started tracking job hiring announcements and its partial year results found employers announcing plans to add 320,262 workers in the last eight months of the year, including 21,262 in December.

The telecommunications sector saw the most job cut announcements in 2004, with 98,734, but that was down from 111,342 cuts in that sector in 2003. The financial services sector was a close second, with 97,945, and that sector also saw the biggest increases from 2003 levels, when only 51,784 jobs were cut there.

The December job cuts hit the Midwest hardest, with almost half the cuts announced nationwide. Michigan alone saw 27,729 job cut annoucements, more than twice the total of any other state. Auto parts maker Delphi announced Dec. 10 that it would cut 8,500 jobs, with 3,000 of those coming in the United States.