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The Pain Spreads

Anecdotal evidence of job losses throughout the economy is spreading. It's not just bankers and builders anymore.

Is the unemployment rate headed north of 6 percent?

The Conference Board thinks so, and others supported that view by saying they found mounting anecdotal evidence that big job cuts are spreading beyond the banks and builders already clobbered by the housing meltdown.

July marked the second time in three months that companies announced job cuts of at least 100,000, the outplacement firm Challenger Gray & Christmas said, as airlines, retailers, automakers and parts suppliers, entertainment companies, and health-care providers all announced deep cuts.

The Conference Board's Employment Trends Index also fell 0.9 percent in July from June, and was down more than 7.5 percent from July 2007.

"Unless the labor market turns around soon, unemployment could pass 6 percent in early 2009—and the Conference Board's Employment Trends Index isn't signaling any such improvement around the corner," said Gad Levanon, senior economist at the board.

The official unemployment rate ticked up two-tenths of a percentage point on Friday, clocking in at a four-year high of 5.7 percent.

The Challenger Gray survey showed the transportation industry racking up the greatest jobs losses last month: 17,051.

"Transportation cuts in 2008 have been dominated by airlines, which are reeling from higher fuel prices and cutting flights, amenities, and workers to offset their costs," said John Challenger, the company's C.E.O.

The still-ailing financial sector chalked up the next-biggest toll, with 15,517 jobs eliminated. Retail was third, with 12,160 losses, followed by automakers with 11,631 cuts. Entertainment and leisure rounded out the top five, announcing plans to cut 10,893 jobs.

For the year so far, financial institutions retain the lead in job destruction, having erased 100,775 through July—50 percent more than at the same time last year. With five months remaining, financial firms are only 52,330 job losses away from last year's record, said Challenger. He said the industry could top its 2007 total of 153,105 by the end of October.

In all, the survey found that employers said last month that they plan to eliminate 103,312 jobs, a 26 percent rise from the 81,755 announced in June. May job cuts, at 103,522, edged out the July losses.

Of the 25 industries tracked by Challenger, 17 have seen job losses increase from a year ago.

The biggest reasons cited for the job losses were market conditions, company closings, bankruptcy, restructuring, cost-cutting, and downturn in demand.


 



 
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