Has the U.S. Layoff Trend Turned?

Rather than repeat the same ominous stuff as everyone else about the horrible February employment data, I thought it would be more interesting to take a look forward with some interesting data. Courtesy of First Rain, here are some charts showing that, according to their data, the pace of layoff announcements has slowed.

Here is the monthly trend, showing the tailing off in February.

And here is the weekly data, which shows something similar.(Click for a larger version.)

Is this the turn in the trend? Who knows. And given that this is tracking stories about layoffs, rather than the layoffs themselves, it could be partly driven by media getting bored of the layoff subject. Nevertheless, given all the one-sided commentary out there ("staring into the abyss", etc.), it's at least worth considering the possibility of an eventual turn in the U.S. employment numbers.

More here.

Comments

[stetic:]

"...it could be partly driven by media getting bored of the layoff subject."

Either way, it is good news because media attention can drive the investor psychology as much as, if not more than, the actual numbers...

Mar 07 04:14 PM

[jp23:]

most of the layoffs recently fall in the category of trimming the fat and getting rid of the low performers (bottom 5-10 percent). If companies earnings fall further, we will see a second wave of layoffs where they are cutting into the meat. I believe the Cisco CEO said he is waiting for more information to decide on more layoffs. In short, it all depends on if company revenues have bottomed.

Mar 07 04:32 PM

[longtermstocks:]

The tax increases will result in more lay offs

Mar 07 04:50 PM

[storm999:]

Nice article, Paul. You should check out Nick Zieminski's analysis on reuters. He quotes the latest CEO survey as indicating continued lay-offs. This doesn't directly contradict your charts -the lay-offs could be of lesser numbers.


"We're going to see continued contraction, at least to the end of the year, and possibly the first quarter of next year," said J.P. Donlon, editor of Chief Executive magazine, whose monthly survey finds CEO confidence at a record low. Seventy-seven percent of CEOs expect jobs to continue to deteriorate over the next quarter.

"They just don't see any horizon at this stage," Donlon said, adding that the monthly survey, which dates back to 2002, typically precedes GDP and employment trends by about six months.

www.reuters.com/articl...

Mar 07 06:41 PM

[Jolly_Rancher:]

Well, as long as we're throwing out examples ... I hear first hand that United Health, despite the stock being back in the teens, is not considering further layoffs; and that in fact they are growing again.

Let's follow the recession trail beginning in spring 2007 with the real estate bust, which spread to banking and automobiles, which spread to global economies, which spread to manufacturing and commercial real estate, which then has spread finally to the rest of the economy including banking again and employment. So it's taken roughly two years to get to this point. My guess is that we're 6-9 months from the finish. Low fuel prices, low interest rates, global government works projects and stimulus will help pull us out.

Very soon we would expect to see strength in the financial and consumer cyclical sectors, although I think the strength will be quite anemic, limited to strong well-positioned companies. This should be followed by strength in transportation and technology, also expected to be anemic. Following right along, should be the global economy, esp. Asian economies, which should take up some of the slack. At this point Asia should become somewhat decoupled as their economies grow without much assistance from exports to the US. Europe unfortunately will experience no growth. They raised interests too long when they should have lowered, and are anchored by eastern basket case economies. Overall it looks like a slow-motion painful process.

Mar 07 07:37 PM

[Randy_H:]

Wrong. There is a much deeper round of layoffs currently in the late phases of execution planning. In just my consulting with large tech corps, every single one is going through ranking and planning for another 10% or more. This will be the second round for most of these guys. Third for one of them.

These aggregate charts and tables don't properly consider the hugely bimodal nature of the data. Layoffs have probably peaked in low-flexibility sections of the labor market, like unionized government and health workers. But make no mistake, among educated, higher end, knowledge, finance and high-end service workers the real pain is yet to come.

Europe's job losses will be delayed by 6 months or more, due to their labor law frictions. Again, among the guys I work with, they're still trying to work through cutting people they'd ranked out in late December. It can take a year to get rid of someone in Germany, for example.

Mar 07 07:53 PM

[Lilguy:]

I think the story is getting old and MSM is generally tired of covering and not having anything new to say. I also expect we saw a seasonal peak in layoffs in the immediate post-Xmas period that accentuated the problem. Now we have become numb to 600,000 people being added to the unemployment roles each week and similar numbers showing up in the monthly NFP layoffs.

Yet the pace of unemployment increases does not appear to be abating. Last month's jump in unemployment to 8.1% was the largest jump in many months and the overall percentage the highest in decades.

Nope, I think we'll see unemployment increase through this year and into next, with a possible hesitation at next year's Xmas season. And that may also be a reasonable inflection point for the rate of unemployment increases to decrease ("second derivative").

I have become increasingly pessimistic as this recession has progressed. That said, I may miss the signs that things are stabilizing. Still, I'm betting on unemployment reaching 11-12% and possibly into the teens. I think this year will really be ugly.

Mar 07 09:48 PM

[Ergo:]

Good discussion. I'm seeing something very consistent with Randy_H. IMO there is more pain to come in the short term. In the long term, the stim pack may have some effect, but the administration's policies will increase manufacturing expenses and cause more pain.

Mar 07 09:49 PM

[Madrid:]

What do people make of the 4 day uptick in the Baltic Dry Index (Tuesday through Friday March 2-6)? And the fact that Eagle Bulk Shipping made a double bottom and went up 17% on Friday and Dry Shipping (DRYS) has begun to uptick as well.

Is all this simply reflecting China stimulus? Or is it a sign of recovery? Or potentially both?

Comments?

Mar 07 10:17 PM

[PeakOiler:]

"Has the U.S. Layoff Trend Turned?" Paul's answer: "Who knows".

Like, why bother.

Mar 07 10:58 PM

[Sentinel:]

It's not JUST about the number of layoffs.

Just like the time it takes to sell a home has increased to 13 months, how long are these laid off people STAYING unemployed?

I've been unemployed since MAY of 2008! I have 14 years of retail sales and management experience and 10 years in the television industry including 5 years as a weatherman. I've put in over 500 applications.

And take a read of this story of the janitor position at a local school in Perry Township, Ohio.....

700 HUNDRED APPLICANTS AND COUNTING !!

www.cantonrep.com/news...

This is why I tell folks who tell me that there are lots of jobs out there...."Sure, but there are MANY, MANY MORE people than there are jobs. Just like you have never won the lottery in Florida not because you don't play a lot, but because the odds are millions to one."

Mar 07 11:06 PM

[@TexasER:]

You are reporting a decrease in media reports about layoffs? Is this story now part of that statistic?

Mar 07 11:11 PM

[bricki:]

There are theories that explain what happened with the BDI.

1. Inability to obtain loans caused a crash in BDI in Sept/Oct below any reasonable rates. The unfreezing of lending allowed this to recover to current recessionary levels.

2. The crash in rates was due to people canceling orders because they were trying to reduce inventories and the increase in rates reflects interest normalization.

3. The world economy has bottomed and recovery has started.

Personally I don't thing it is #3.

On Mar 07 10:17 PM Madrid wrote:

> What do people make of the 4 day uptick in the Baltic Dry Index (Tuesday
> through Friday March 2-6)? And the fact that Eagle Bulk Shipping
> made a double bottom and went up 17% on Friday and Dry Shipping (seekingalpha.com/symbo...)
> has begun to uptick as well.
>
> Is all this simply reflecting China stimulus? Or is it a sign of
> recovery? Or potentially both?
>
> Comments?

Mar 07 11:35 PM

[Moon Kil Woong:]

The fact that record unemployment keeps rising in a fischer death spiral and is becoming less newsworthy just shows the depth of the crisis.

Mar 08 12:51 AM

[docklc:]

Excellent pro and con comments, with a decidedly negative tone. Could it be we're closing in on a bottom? I don't think anyone really knows, expert or schmuck. So, here's my summary: I don't think Larry Kudlow knows diddly about much of anything. I do think that some of the money thrown out into the wind may, I say may, start to have an effect in a month or three along with efforts to halt the housing slide through foreclosure forebearance/mortgage restructurings/lower rates and Govt. pressure to lend on the banks.

We're also heading into Springtime, when things often start to pick up and people become a bit more optimistic in general, so there may be a little updraft to the market, but who knows?

As the comments have shown, it's a tough, tough, tough call. One last question, how many other periods have there been (outside of Japan) when interest rates have been this low and the market and economy have not responded? Fear is in the driver's seat, but until the great asteroid hits, the sun will shine, flowers will bloom and grass will green.

Mar 08 01:34 AM

[Steve in Gr...:]

It really isn't so tough a call. The layoff trend is the trend. It hasn't turned and won't for another 12 months (at least). Anybody who tells you differently is not living in the real world.

Mar 08 10:19 AM

[frosty:]

Ridiculous article. The 'data' is totally anecdotal, there is no meaningful analysis, the conclusion is a question. Fitting for a layman's blog comment but it should not masquerade as illuminating economic analysis. This guy is a Ph.D.?

Mar 08 11:38 AM

[ceekay:]

In 2011...do you have all your marles intact? I thin we are talking about this month


On Mar 07 04:50 PM longtermstocks wrote:

> The tax increases will result in more lay offs

Mar 08 11:41 AM

[Mafeking:]

One month's improvement does not a recovery make!

Mar 08 12:11 PM

[savelongisl...:]

To me what is more critical now than the pace of layoffs at this point is the horizon for growth. Massive existing debt will prevent any forthcoming fuel to the economy, so while layoffs may reach a flatline point, if there is no growth, where is the opportunity? The debt unwinding process will take some time.

Mar 08 01:50 PM

[Duude:]

The initial jump in unemployment could be the collateral damage that first arose with the beginning of the credit crisis. A large part was in the construction and financial services industries which were immediately impacted. It also would explain the larger number of men who have lost jobs compared to women. Since the initial (partial, kinda like a fix) fix, some credit has returned to the market but its still greatly inadequate. There has been NO progress made in banking in the last 2 months and without a more complete fix we could be headed for more collateral damage. For some unknown reason, the Treasury seems to be looking elsewhere. Its not like they can't keep their eye on the ball, rather they can't find the game.

Mar 08 05:16 PM

[BudH:]

It won't hurt too bad until the unemployment ins. is all used up, taxes dry up, and social services are stretched beyond limits. Right now the layoffs are so recent people are not really broke yet.

Mar 08 11:05 PM

[Movingupfast2:]

Its the soybean crop being harvested in South America, its that time of year. The Panamax class ship rates are increasing. Don't see the Capesize class moving as fast.

On Mar 07 10:17 PM Madrid wrote:

> What do people make of the 4 day uptick in the Baltic Dry Index (Tuesday
> through Friday March 2-6)? And the fact that Eagle Bulk Shipping
> made a double bottom and went up 17% on Friday and Dry Shipping (seekingalpha.com/symbo...)
> has begun to uptick as well.
>
> Is all this simply reflecting China stimulus? Or is it a sign of
> recovery? Or potentially both?
>
> Comments?

Mar 09 03:36 AM

[MJJP:]

It could be that China is hoarding supplies. The miners continue to cut back production. 65% of the BDI is coal shipments and iron ore. If this is the case watch for the BDI to flat line for some time and then sink. The bottom falls out at that point.


On Mar 07 10:17 PM Madrid wrote:

> What do people make of the 4 day uptick in the Baltic Dry Index (Tuesday
> through Friday March 2-6)? And the fact that Eagle Bulk Shipping
> made a double bottom and went up 17% on Friday and Dry Shipping (seekingalpha.com/symbo...)
> has begun to uptick as well.
>
> Is all this simply reflecting China stimulus? Or is it a sign of
> recovery? Or potentially both?
>
> Comments?

Mar 09 08:04 AM

[Annualgain:]

Challenger Gray data also showed a decline in layoff announcements from January to February. As far as I know, this is the most comprehensive collection of layoff announcements. This is forward looking as announcements are often for layoffs that will occur in the future. Of course, the numbers are still up by A LOT vs. 2008.

January 241,749
February 186,350

URL to cnn story to support my comment:
money.cnn.com/2009/03/...

Mar 09 10:09 AM