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U.S. Employment Dragged Down By Shrinking Oil Sector

The loss of jobs in the United States was down significantly in October compared with September, but unemployment surged in the oil industry, according to a new report by a leading outplacement firm.

Challenger, Gray & Christmas reported Nov. 5 that employers announced plans in October to lay off a total of 50,504 workers, a drop of 14 percent from the 58,877 announced the previous month, and down 1.3 percent from the 51,183 job losses announced in October 2014. So far this year, employers have said they planned to eliminate 543,935 jobs, a rise of 31 percent over the first 10 months of 2014.

At the same time, Challenger’s monthly report said, 13,671 jobs, more than a quarter of the overall job losses, were attributable to the persistently low price of oil. That represents the highest number of job losses related to oil prices since April, when 20,675 jobs were lost because of depressed oil prices, which have fallen from more than $110 per barrel in June 2014 to around $50 per barrel today.

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“Not surprisingly, the energy sector is the top job-cutting industry for the year, having announced a total of 90,052 job cuts to date” the report said. “That is up 766 percent from a year ago, when employers in this sector announced just 10,402 job cuts through October.”

Still, John Challenger, the CEO of the outplacement firm, expressed little concern for the overall impact of the numbers in the oil industry.

“While falling oil prices are impacting the bottom lines of companies in the energy and industrial goods sectors, they are helping many other employers, such as those in transportation and plastics manufacturing,” which are buying oil products at bargain prices, he said in a statement.

Challenger said many observers see this year’s fourth quarter as a period of corporate retrenchment.

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“Now we are heading into what has historically been a period of heavy job cutting, even in the strongest economy,” Challenger said. “The fourth quarter is when many companies make adjustments to operations and payrolls in order to hit year-end earnings goals.”

“We could see an increase in layoffs,” Challenger said, “but we are just as likely to see an increase in hiring, as companies find themselves shorthanded and unable to meet demand.”

The energy industry isn’t the only area that’s seen a rise in layoffs in 2015. Cuts in military personnel have ranked the U.S. government as No. 2 among sectors reducing employment. Job cuts by the government, including but not limited to the military, numbered 69,105 in the first 10 months of the years, fully 226 percent higher than the 21,200 cuts announced in the same period of 2014.

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In third position after the U.S. government is the retail sector. So far this year it has laid off 64,983 employees, compared with 38,948 in the same period of 2014. That’s an increase of 67 percent, the Challenger report said.

Challenger stressed, however, that retail job cuts, as well as cuts in the computer industry, don’t necessarily mean that the U.S. economy is slowing down because both sectors are at the mercy of shifting consumer and business trends.

“Many of the cuts we have seen this year in both industries have been the result of companies’ inability to keep up with changes versus an overall decline in demand,” Challenger said.

By Andy Tully of Oilprice.com

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