Here's a little good news to brighten the holiday season: the job market ought to improve markedly in 2010. That forecast comes from Challenger, Gray & Christmas, a job-counseling and outplacement firm that monitors companies' public announcements of hiring and firing plans. Its prediction is based heavily on two trends detected in its surveys. (Article continued below…)
First, layoff announcements have declined dramatically. The peak month for job cuts was January 2009, at 241,729, the highest since January 2002. Since then, monthly job cuts have steadily dropped to 50,349 in November, the latest available. In the first half of 2009, monthly job losses averaged 130,000; in the second half of the year (through November), the average was almost half that, at 69,000.
Second, hiring plans have picked up. Take a look at the following
Of course, these numbers just reflect announcements and, as the firm notes, many hiring and firing decisions are made with little or no public notice. It's also true that many industries continue to have less hiring than in 2008: in the energy sector, hiring announcements in 2009 total 7,525, down from 18,216 in 2008. Still, the trend lines are unmistakable. In 2008 and the first half of 2009, there was lots of firing going on—and not much hiring. Now, the firing is subsiding, and hiring is reviving. All told, hiring announcements in 2009 totaled 236,981, compared with 118,600 in 2008. At some point next year, the lines ought to cross. Payrolls will expand and, sooner or later, the unemployment rate will begin to drop.
"The end of the year is typically when we see a surge in layoff activity," said John A. Challenger, the firm's chief executive, in a statement. "The fact that job cuts continued to decline in the fourth quarter is a good sign that the job market has truly started the recovery process."
But just when net job creation begins or when the unemployment rate falls aren't easily predicted, Challenger added. Indeed, the strengthening of the job market might have the paradoxical effect of temporarily driving up the unemployment rate.
Here's why. The widespread layoffs and hiring freezes so demoralized many Americans that they gave up looking for work. As a result, they aren't considered "in the labor force" and aren't counted among the unemployed by the Bureau of Labor Statistics, which oversees the job numbers. In November there were about 6 million Americans in this group, up from 4.2 million in November of 2007 before the recession began, Challenger said. But an improving job outlook will tempt many of these people to start looking for work again—and raise the unemployment rate.