US employers announce fewer layoffs in May; still no impact from spending cuts

NEW YORK (REUTERS) - The number of planned layoffs at companies in the United States fell in May for the third month in a row, as there was little sign so far that fiscal austerity in Washington was hampering the job market in a significant way, a report on Thursday showed.

Employers announced 36,398 job cuts last month, down 4.5 per cent from 38,121 in April, according to the report from consultants Challenger, Gray & Christmas. Last month's layoffs were also significantly lower than what was seen a year ago, down 41.2 per cent from last May's 61,887. May typically sees the smallest number of layoffs of the year, the report said.

For this year so far, employers have announced 219,560 cuts, compared to the 245,540 jobs that were cut in the first five months of last year.

"So far, the threat of massive job cuts related to federal spending cuts has failed to materialise", Mr John Challenger, chief executive officer of Challenger, Gray & Christmas, said in a statement.

Although the job market is not out of the woods yet as far as the potential for government downsizing is concerned, improvements in the economy may delay or minimise the impact on the workforce, Mr Challenger said.

Across-the-board government spending cuts of US$85 billion (S$106 billion), known as the sequester, went into effect in March, and recent data has hinted the belt-tightening is starting to crimp overall growth.

There were fewer than 1,500 job cuts directly attributed to federal cutbacks and the sequester, Mr Challenger said. Still, the health-care sector suffered the biggest job losses last month, with layoffs rising to 4,886.

The report comes a day ahead of the key US jobs report, which is forecast to show job gains picked up only modestly to 170,000 in May, while the unemployment rate is expected to hold steady at 7.5 per cent.