The number of job cuts in the United States in July was 54% higher than in June, according to a report by Challenger, Gray & Christmas Inc. published on Thursday. There were 262,649 dismissals in July, representing a 576% surge on an annual basis.
The year-to-date figure reached 1,847,696, rising by 212% from the 592,556 recorded in the same timeframe last year. The market conditions caused 77,092 layoffs, followed by 63,517 dismissals due to the coronavirus pandemic, while 60,831 people lost their jobs in July because of the demand downturn. This year, 1,074,904 cuts in total have been attributed to COVID-19.
“The downturn is far from over, especially as COVID cases rise around the country. Consumers are buying fewer goods and services, businesses are closing, and bankruptcies are rising,” Senior Vice President of Challenger, Gray & Christmas Inc. Andrew Challenger noted.
July’s job cuts brought the total so far this year to 1.848 million, up 212% from the same period in 2019. The year-to-date layoffs are just 109,180 away from the record 1.957 million job cuts announced in 2001.
The weak labor market data raises the risk of a sharper slowdown in job growth in July. The Labor Department will publish its closely watched, and broader, monthly employment report on Friday. According to a Reuters survey of economists, nonfarm payrolls likely increased by 1.6 million in July, down from the record 4.8 million jobs created in June.
According to Challenger, Gray & Christmas, COVID-19 was cited as the reason for 63,517 job cuts in July. The respiratory illness has been blamed for 1.075 million layoffs so far this year. The balance of job cuts in July were attributed to market conditions, a downturn in demand and bankruptcies.
Several retailers including J.C. Penney and Lord & Taylor have filed for bankruptcy since March. Job cuts remained concentrated at bars, restaurants, hotels and amusement parks. The automotive sector cut 83,853 jobs. Hiring announcements totaled 246,507 in July, almost matching layoffs.
“It is clear that many job losses are now permanent, and it will be challenging for many workers to find new jobs and feel safe taking jobs that are public-facing,” said Challenger.