Saturday, March 07, 2009

Have Job Layoffs Peaked in January?

According to Penny Herscher at the Market Mine blog:

There's a turn in the U.S. employment market happening - there's evidence that the number of layoff announcements and reported layoff events has started to drop (see chart above of the monthly volume of unique stories on layoffs). This does not mean the number of job losses will drop yet since announcements precede the actual elimination of jobs, but it is a leading indicator of the turn in the employment market.

For the last few months it has seemed as if the bad news on layoff announcements just kept growing and as I watched the web news flow on U.S. Layoffs specifically - as you can do too both in the free FirstRain newsletter Eye on the Storm - or on the front page of firstrain.com - it has been like watching a train wreck every day.

But I've also been watching the statistics to look for a turnaround in the trend - and it's started. There is no way to know if this is the turn or a turn in the trend but it is a compelling change in the data and could be a leading indicator of a change in the way companies are dealing with the crisis.

The report published by Watson Wyatt last week "Company Layoff Plans Expected to Decline" also corroborates that companies have made the sweeping deep cuts and the majority are now focusing are local management measures such as salary freezes and cutting 401(k) contributions to further manage costs (see related post above).

MP: A Google Trends analysis over the last 12 months of "layoffs" provides some additional evidence of a January peak in layoffs (see chart below). Notice that both the search volume index (top line) and the news reference volume (bottom line) for "layoffs" peaked in mid-January, and have been declining ever since.

Thanks to CD reader Andrew Greene, who alerted me to Paul Kedrosky's posting about this at his excellent blog Infectious Greed (I met Paul at Kauffman Foundation's Economics Blogger Forum, and just added his blog to my blogroll).

4 Comments:

At 3/07/2009 10:40 AM, Anonymous Anonymous said...

next how can we stop the government printing presses?? End the Fed.

 
At 3/07/2009 12:33 PM, Blogger Jeff Herron said...

Just because the news services have stopped reporting on the layoff situation, that is no indication of a turnaround. It seems fairly common that the news gets fatigued over the same news over and over, even of it is important to be relayed -- remember how we went weeks and weeks without hearing anything about the Iraq war whenever there was anything else to report about (e.g., the Presidential race)?

Also, even though the spike in new jobless claims may be behind us, does that mean that the total number of unemployed will begin to recede? I don't think it does, but maybe I am missing something in these numbers.

Love the blog. Thanks for all the effort you put into it!

 
At 3/09/2009 11:24 AM, Blogger Kevin Murphy said...

Pure observation on my part (i.e. I don't have any hard data to back it up), but it seems like companies lay off more at the end of the year, when budget cycles come to an end and there isn't any room to improve in the future.

 
At 3/11/2009 7:24 PM, Anonymous Anonymous said...

I was told just a week ago by individuals in top management of two S&P 500 companies that the layoffs are ending because there's work to be done.

Pay cuts and furloughs are on the way.

 

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