Job Losses Continue to Grow in July

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Researched by Industrial Info Resources (Sugar Land, Texas)--For the seventh straight month, job losses continued to mount in the United States as rising oil and gas prices, combined with the lingering effects of the recent housing, credit and financial problems and a weak dollar, have forced employers to reduce payrolls nationwide. In 2008, over 460,000 jobs have been lost in the U.S., as the unemployment rate climbed to a four-year high of 5.7% in July.

Within the manufacturing sector, some 35,000 jobs were lost during the month. The construction sector has been faring slightly better with only 22,000 jobs lost, however if the trend does not reverse, construction job losses are expected to increase. Spending has actually increased over the same period in 2007. Between January and July 2008, over 3,700 projects began construction, representing an estimated $140 billion in capital and maintenance investment within the U.S. During the same period in 2007, just over 3,200 construction projects broke ground, with an estimated total value of $88 billion.

Click on the image at right to see an industrial project spending analysis for 2008.

The main difference in job cuts during 2008 versus 2007 appears to be in how the jobs are being terminated. According to the June 2008 mass layoff summary by the U.S. Department of Labor, mass layoffs have been at their highest levels since 2003. Many of these layoffs have occurred within non-manufacturing sectors and show that civil service and service sectors are also reducing costs. Schools, particularly in regard to bus transportation, have seen the highest amount of mass layoffs. Other non-manufacturing sectors such as food services contractors, temp services, child day care, discount department stores and the motion picture and video production sectors, have been feeling the pinch as both consumers and industries reduce spending across the board.

In the manufacturing industry, the automotive industry has been hit the hardest in terms of mass layoffs. Both the truck and SUV sectors have been hammered with layoffs as automakers attempt to move out of these businesses to meet the move by consumers to purchase smaller, more fuel-efficient vehicles to keep pace with higher gas prices. Of the mass layoffs reported in June 2008, 19% occurred in the manufacturing industries. After the transportation sector, food manufacturing was hardest hit by these cutbacks.

With higher gas prices and a shaky economy, consumers are altering their spending habits. This in turn has affected the manufacturing industries, especially the automotive and food and beverage sectors, where people simply cannot afford to spend the money they have on larger vehicles and an evening out at a restaurant. In July, the Bennigan's and Steak & Ale restaurant chains, owned by privately held Metromedia Restaurant Group, announced they would be closing their doors, injecting more job-seekers into the burgeoning unemployed population. In addition, more job cuts are certainly on the way within the automotive sector, as all of the automakers are suffering an extremely rough sales year and have been laying off employees and announcing plant closures throughout the year.

Until oil prices stabilize and the economy strengthens, job losses will continue to occur. A glimmer of hope can be seen in the expenditure totals of manufacturing industries, which have continued to grow. The remainder of 2008 will almost certainly be rough for the U.S., but hopefully 2009 will turn things around, bringing back many of the jobs that have been lost as the manufacturing and commercial sectors of the economy grow more stable.

Industrial Info Resources (IIR) is a marketing information service specializing in industrial process, energy and financial related markets with products and services ranging from industry news, analytics, forecasting, plant and project databases, as well as multimedia services.