Planned layoffs fall 22% in 2006

December's tally down 29%, bucking the usual end-of-year slashing

By Rex Nutting, MarketWatch

Last Update: 7:31 AM ET Jan 4, 2007

WASHINGTON (MarketWatch) -- The number of corporate job reductions announced during 2006 fell 22% to 839,822, marking the first year since 2000 in which there were fewer than a million such layoffs, according to data released Thursday by outplacement firm Challenger Gray & Christmas Inc.

Underscoring this, planned job cuts dropped 29% to 54,643 in December from November's 76,773. Compared to 107,822 announced in December 2005, the latest job cuts were down 49%.

"Even as the economy slowed in the last half of the year due to weakness in the housing market, we did not see the typical spike in fourth-quarter job cuts," said John Challenger, CEO of the firm, in a press release. The figures are not seasonally adjusted.

Planned reductions in the fourth quarter were down 30% on a year-over-year basis, amounting to 200,593 vs. 288,593 in 2005.

The automotive industry led all sectors with 158,766 job reductions in 2006, up 50% from 2005's total. The industrial-goods sector saw 78,381 reductions during 2006.

Job reductions in the telecommunication sector fell by 34% compared with 2005, while cuts in the aerospace sector decreased by 47%.

In December, the auto industry announced 7,309 reductions. Financial firms announced 7,284 layoffs, followed by media with 5,439, industrial goods with 4,712 and retail with 4,197.

Corporate layoff announcements peaked at 1.96 million in 2001. They fell to 1.07 million in 2005.

The Challenger report, an unscientific tally, covers only a tiny fraction of those who lose their jobs each month.

In October, for instance, a total of 1.6 million workers were discharged from their jobs involuntarily, representing about 1.2% of total employment, according to the latest available data from the Labor Department. By comparison, 2.5 million quit their jobs voluntarily in October.

The layoff announcements tracked by Challenger could take place immediately or over time. The reductions could be accomplished by voluntary means such as retirements or workers leaving for other jobs. And they could be offset by hiring in other divisions of a company.

Rex Nutting is Washington bureau chief of MarketWatch.