CHICAGO – Job cut announcements surged to their highest level in nearly two years, as falling oil prices prompted cost-cutting efforts in energy and related industries. In all, U.S.-based employers announced plans to shed 53,041 jobs from their payrolls to start 2015; with 40 percent of those directly related to oil prices.
The January total was up 63 percent from the 32,640 planned layoffs announced in December, according to the report on monthly job cuts released Thursday by global outplacement consultancy Challenger, Gray & Christmas, Inc.
Last month’s figure was 18 percent higher than the same month a year ago, when employers announced job cuts totaling 45,107. Last month, in fact, saw the highest monthly job-cut tally since February 2013 (55,356) and the highest January total since 2012, when employers announced 53,486 job cuts to begin the new year.
Of the 53,041 job cuts announced in January, 21,322 were directly attributed to the recent and sharp decline in oil prices. Most of these cuts occurred in the energy industry, where employers announced a total of 20,193 layoffs (19,722 of which were directly attributed to oil prices). The January total is 42 percent higher than the 14,262 job cuts announced by the energy industry in all of 2014.
Falling oil prices also contributed to job cuts in the industrial goods manufacturing sector, where companies supplying products and materials to oil drillers were forced to shutter operations. These firms announced 4,859 job cuts in January, of which 1,600 (or 33 percent) were due to oil prices.
“We may see oil-related job cuts extend well beyond those industries directly involved with exploration and extraction. The economies throughout the northern United States that have been thriving as a result of the oil boom could experience a steep decline in employment across all sectors, including retail, construction, food service and entertainment,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.
“On the flip side, there are a number of industries throughout the country that will benefit from falling energy prices. Delta already reported significant savings tied to lower fuel costs. The airline is also seeing more travelers as lower ticket prices are spurring purchases from travelers, who have more money in their wallets. Trucking companies, plastics manufacturers and paint makers are also seeing bottom lines improve,” said Challenger.
“Despite the recent surge in job cuts, the net result of falling oil prices could ultimately prove to be positive for the economy, as a whole. Not only will many industries see cost savings, but consumers will have more money for discretionary spending on things like dining out, travel, and entertainment. Lower prices at the pump has also been linked to higher sales of SUVs and other less fuel-efficient vehicles,” he added.
While retailers may ultimately benefit from falling oil prices, the sector did, in fact, post the second largest job cut total in January, behind energy. Employers in the sector announced 6,699, the bulk of which came from the perennially struggling JC Penney and teen fashion retailer Wet Seal.
Despite large layoff announcements from the two companies, retail job cuts were still lower than the same month a year ago, when stores announced 11,394 cuts coming out of the holiday season.