The January report on job cuts from staffing firm Challenger, Grey, & Christmas showed that oil prices are really starting to take their toll on the labour market.
From Challenger’s release on Thursday morning:
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 per cent of those directly related to oil prices.
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 per cent higher than the 14,262 job cuts announced by the energy industry in all of 2014.
In January, oil prices were cited as the #1 reason for job cuts, outpacing restructuring-related job cuts.
By state, the largest number of job cuts were seen in Texas, where 19,833 jobs were cut in January. California, Oklahoma, and Colorado also saw job cuts total more than 1,000 in January.
In its release, Challenger, Grey, & Christmas CEO John Challenger said, “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.”
Challenger added that, “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 … 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.”
On Wednesday, we highlighted comments from Moody’s Analytics chief economist Mark Zandi, who said in the latest ADP private payrolls report that, “Businesses in the energy and supplying industries are already scaling back payrolls in reaction to the collapse in oil prices.”
Oil prices have been bouncing all over the place of late, but are still about 50% lower than where they were a year ago.