Monday, March 23, 2009
The Bureau of Labor Statistics released a terrible report on mass layoffs for February. The BLS defines a mass layoff event as one where a single employer lays off 50 or more workers at one time. According to the BLS:
- 2,769 mass layoff actions occurred in February on a seasonally adjusted basis.
- 295,477 workers lost jobs associated with the mass layoffs.
- The number of mass layoffs events increased by 542, the largest increase since Hurricane Katrina.
- Over the year, the number of mass layoff events increased by 1,100, and the associated initial claims increased by 112,439.
Accordingly, the labor market is very weak, falling farther in February. However, there are signs that the mass layoff events may be nearing a peak.
The chart illustrates the annual growth in mass layoffs on a seasonally adjusted basis and on a non-seasonally adjusted basis. The seasonally adjusted mass layoffs (in persons) are up 61% over the year, marking the third consecutive month where the annual growth rate has accelerated. However, the nonseasonal growth rate is down to 83%.
Admittedly, the mass layoff growth rate is still very high, and furthermore, the series is very volatile. Mass layoffs are almost certain to remain at very elevated until the labor market works itself out. It's just that the seasonal adjustments may be masking the true situation of the mass layoff report; specifically, mass layoffs may, at the very best, not be worsening.
The reduction in layoff announcements tentatively suggests that mass layoffs may have peaked.
The chart illustrates the number of workers who lost their jobs in mass firings as a share of the total nonfarm payroll (to extract population trends from the data), and the number of announced layoffs tallied up by Forbes layoff tracker. The tracker implicitly follows mass layoffs, as most of the listed firms are laying off in bulk. Even though the Forbes layoff tracker only includes data since November 2008, it does move very positively with the mass layoff report.
To date, Forbes tracked 26,000 announced layoffs in March, down sharply from the 125,700 announced in February. I understand that March is not over, but it is almost over. So barring a 100k surge in announced layoffs over the next week, the Forbes layoff tracker suggests that the BLS March mass layoff report might show a decline in the number of persons being laid off in mass. Still way too early to tell, and mass layoffs are very likely to remain elevated throughout 2009, but perhaps we are at a peak (only in mass layoffs, which is a small share of total layoffs).