NEW YORK—November saw U.S. companies lay off more than 500,000 workers, and if recent announcements are any indication, this month’s total may exceed that amount.
A flurry of corporate layoff announcements greeted investors as we approach the midpoint of December, fanning fears of a recession deeper than most economists had predicted.
Last week alone saw almost 100,000 positions eliminated across all industry sectors.
Banking giant Bank of America Corporation announced up to 35,000 layoffs over the next three years. The company cited slowing business environment due to the ongoing economic recession and its recent merger with Merrill Lynch as reasons for the cuts.
The manufacturing sector also experienced major cuts. Anheuser-Busch InBev, the Belgian-American brewer, announced planned eliminations of 1,400 salaried positions in the United States. The layoffs are related to InBev’s recent acquisition of St. Louis-based Anheuser-Busch, and 75 percent of the affected workers are based in Busch’s U.S. headquarters in the St. Louis area. The cuts are in addition to 1,000 U.S. Busch employees who already accepted the company’s early retirement offers.
3M, the St. Paul, Minn.-based technology giant, also reported 1,800 job cuts. Japanese electronics manufacturer Sony Corp. said last week it would slash up to 8,000 jobs, or 4 percent of its total global workforce. It also does not plan to renew contracts for another 8,000 seasonal and temporary workers.
"It's only really getting underway right now," Credit Suisse economist Joseph Lau said in a Reuters interview regarding the Asian electronics sector. "It's not likely to bottom out anytime within the next two to three quarters, so we'll probably look at at least that much time in terms of further corporations restructuring their workforce and overall financial health."
The decision, coupled with announced production cuts and cost cutting measures, is aimed to contend in a declining market for electronics, televisions, and entertainment systems.
There were no fewer bad news the previous week, when AT&T Inc., Viacom, and DuPont announced almost 35,000 job cuts combined.
Stocks Climb on Friday
Wall Street shook off the bad news on Friday to close moderately higher. The Dow Jones Industrial Average gained 64.59 points (0.75 percent), the S&P 500 Index gained 6.14 points (0.70 percent), and the tech-heavy Nasdaq Composite Index outpaced all indices with a 2.18 percent (32.84 points) jump.
Stocks rose as investors hoped for a resolution to the U.S. auto industry bailout—defeated earlier this week in Congress—currently gaining support in the White House and the Treasury. President Bush and Treasury Secretary Hank Paulson sent signals late last week that Washington may use part of the Troubled-Asset Relief Program to aid Detroit automakers.
Investors are hopefully for a deal as 2009 approaches. Automakers General Motors Corp. and Chrysler LLC said earlier this month that their cash reserves are dwindling and without a bailout, they may be forced to file for bankruptcy.
The “Big Three” U.S. automakers together employ about 250,000 people, and up to 1 million jobs in related industries such as auto parts and auto sales/dealerships may be affected.
Technology stocks led most industries last Friday, with Apple Inc. gaining around 3.4 percent and United Technologies rising 3.7 percent on the New York Stock Exchange. As we approach the last two full weeks of trading, 2008 may end up as one of the worst performing years in recent memory. The Nasdaq is down about 42 percent year-to-date, S&P is down about 40 percent, and blue chips on the Dow is down about 35 percent this year.