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Wall Street Turmoil Has Little Impact on Sept. Job Cuts

Computer, automotive sectors hit the most; Financial sector surprisingly strong

October 2, 2008

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With the economy teetering around them, U.S. employers announced plans to cut another 95,094 jobs in September, a 7.2 percent increase from the 88,736 job cuts announced in August. That brought the third-quarter layoff toll to 287,142, the highest quarterly total since the fourth quarter of 2005.

September layoffs were 33 percent higher than September 2007, when 71,739 job cuts were announced, according to the latest job-cut report released Wednesday by outplacement consultancy Challenger, Gray & Christmas, Inc.

Last month's total was the third largest of the year, behind May (103,522) and July (103,312).

The 287,142 job cuts announced in the third quarter represents a 4.3 percent increase from the 275,292 job cuts in the previous quarter and a 48 percent surge from the 194,095 job cuts announced in the third quarter of 2007.

Through nine months, announced layoffs total 763,090, which is 30 percent more than the 587,594 job-cut announcements recorded through September 2007. It is just about 5,000 shy of last year's 12-month total of 768,264, a level that is likely to be surpassed within the first couple of days in October.

While September 2008 will undoubtedly be remembered for the collapse of several Wall Street firms and the emergency efforts by the federal government to stabilize the financial markets, these events surprisingly resulted in relatively few financial sector job cuts during the month. The financial sector announced just 8,244 job cuts during the month, ranking it fourth among the industries tracked by Challenger.

The leading job cutter in September was the computer industry, where Hewlett-Packard announced the single largest workforce reduction of the year, eliminating 24,600 positions from its global workforce in the wake of its merger with Electronic Data Systems, Corp.

Automotive companies also announced more job cuts. The industry plans to cut another 14,595 jobs, bringing the total number of job cuts in this sector for the year to 94,918.

"It may take several weeks or months for the fallout from September's Wall Street turmoil to hit the employment numbers. We have financial institutions being bailed out by the government, some are being acquired by other banks and others are being seized and liquidated. While all of these scenarios are being played out, the fate of the workers remains in limbo," said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

"In the case of Merrill Lynch, for example, Bank of America will now decide how many of the investment firm's approximately 64,000 employees to keep. For Lehman Brothers, the picture is even less clear since it is being sold off to multiple bidders. In the case of Freddie Mac and Fannie Mae, the government bail out is no guarantee that jobs will be saved," said Challenger.

As the future of the financial market remains up in the air, other industries are feeling the impact of the faltering economy. The automotive industry has announced nearly 76,000 job cuts since May. Retailers have announced 24,384 job cuts over the last three months.

Government agencies at all levels are feeling the pinch from lower tax revenues. Announced job cuts in this sector have increased 129 percent from a year ago.

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