Challenger: Heavy layoffs in energy, retail sector spike job cuts by 218% in January

Heavy downsizing in the retail and energy sectors, including recently announced layoffs by Walmart and oil field service giant Halliburton, pushed monthly job cut announcements to their highest level since last summer, according to the latest report on monthly job cuts released Thursday by global outplacement consultancy Challenger, Gray & Christmas, Inc.

In all, U.S.-based employers reported 75,114 planned job cuts to kick off 2016, a huge 218% spike from a 15-year low of 23,622 in December. January was 42% higher than the same month of 2015, when employers announced 53,041 job cuts.

Last month represents the highest monthly tally since July 2015 when cuts reached 105,696. It was the largest January total since 241,749 job cuts were announced during the first month of 2009.

Despite relatively strong holiday sales to close out 2015, retailers led all other industries in January job cuts, announcing plans to cut 22,246 jobs from their payrolls. That was the highest retail total since January 2009 when retailers announced 53,968 planned layoffs.

WALMART CUTS TO IMPACT 16,000 WORKERS
Retail cuts were dominated by Walmart, which announced plans to close 269 stores worldwide, which is expected to impact 16,000 workers. Macy’s is also planning to close stores in 2016, a move that will affect 4,820 employees.

“Retail job cuts came on the heels of relatively strong holiday sales, which increased by nearly 8%. However, a growing portion of the sales gains are occurring online,” said Challenger, Gray & Christmas CEO John Challenger. “At Macy’s, for example, November and December sales at its brick-and-mortar stores fell by about 5%, while orders through its online entities were up 25% from a year earlier, according to reports.”

Challenger continued: “This shift is making it necessary for retailers like Macy’s and Walmart to rethink their strategy; moving away from traditional stores and investing more into Internet sales. Unfortunately, this shift is resulting in widespread job cuts across the industry, even in times of good health.”

In addition to increased retail job cuts, January also saw the return of heavy job cuts in the energy sector. Overall, these firms announced plans to reduce headcounts by 20,246, up from 1,682 in December.

The January total for job cuts in the energy sector was the highest monthly tally since the decline in oil prices began in late 2014. The previous high was January 2015 when 20,193 jobs in the sector were eliminated.

Since oil prices began their decline, Halliburton has announced 22,000 job cuts through multiple job-cut announcements. Schlumberger has also reported multiple layoff events since late 2014, with total job cuts exceeding 30,000. Baker Hughes has also announced multiple layoffs, totaling 16,000.

“The pace of downsizing in the energy sector ebbed in the second half of 2015, but the latest activity, which included more cuts from Halliburton and Schlumberger, is evidence the industry is far from concluding its cost-cutting initiatives. With oil prices expected to stay low for the foreseeable future, the potential for continued layoffs remains elevated,” said Challenger.