Layoffs in U.S. Hit Lowest Rate Since 2000

A monthly survey by Challenger, Gray & Christmas revealed that the present rate of layoffs in the U.S. has not been this low since the year 2000. This eleven-year-low could signal the beginning of a turnaround, or at least a stabilizing period for the U.S. employment numbers.

The report also noted that planned layoffs for the months of May and June were high, but the overall rate of 2011 layoffs was low.

Of the total 245,806 layoffs counted in 2011, 77,591 were in the public sector. This is down from 2010 layoff levels, but more workers were laid off by the government than by any other sector.

Aerospace and the defense industry were also hit hard. These sectors may have suffered due to reduced government spending; a significant component of much the industry's revenue.

In addition to layoffs being down, hiring is also weaker than it has been in the past. Obviously, hiring levels must increase before the unemployment rate can to return to normal. The latest numbers released by the Bureau of Labor Statistics placed unemployment at 9.1% for the entire United States in May 2011.

ACTION ITEMS:

Bullish:

• Markets may rally on news of reduced layoffs. These numbers may be interpreted as the beginning of a turnaround by some investors, which could mean increased consumer and investor optimism.

Bearish

• A lower layoff rate does not mean lower unemployment. Workers are still struggling to find jobs without an increase in hiring opportunities to aid them. The unemployment rate more accurately indicates the health of the economy.

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