Wall Street Greek: Layoffs Run High

Sitting here just hours ahead of the monthly Employment Situation Report, upon which volatility could swing stocks going into the long holiday weekend, we thought we would take a closer look at the week’s employment data. Specifically, we want to talk about the disturbing layoff data that was reported on Wednesday.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

Relative Tickers: NYSE: RHI, NYSE: KFY, NYSE: MAN, NYSE: MWW, Nasdaq: KELYA, Nasdaq: JOBS, NYSE: JOB, Nasdaq: CECO, Nasdaq: PAYX, NYSE: ASF, Nasdaq: KFRC, NYSE: TBI, NYSE: DHX, NYSE: SFN, NYSE: CDI, Nasdaq: CCRN, Nasdaq: ASGN, NYSE: AHS, Nasdaq: BBSI, Nasdaq: HHGP, NYSE: SRT, Nasdaq: RCMT, Nasdaq: VSCP, OTC: ASRG.OB, OTC: MCTH.OB, OTC: IGEN.OB, OTC: STJO.OB, OTC: TNUS.OB, Nasdaq: TSTF, OTC: STTH.OB, OTC: PSRU.OB, OTC: CRRS.OB, NYSE: BAC, NYSE: JPM, NYSE: GS, NYSE: C, NYSE: MS, NYSE: WFC, NYSE: TD, NYSE: PNC, NYSE: GE, NYSE: WMT, NYSE: MCD, NYSE: AA, NYSE: AXP, NYSE: BA, NYSE: CAT, Nasdaq: CSCO, NYSE: CVX, NYSE: DD, NYSE: DIS, NYSE: HD, NYSE: HPQ, NYSE: IBM, Nasdaq: INTC, NYSE: JNJ, NYSE: KFT, NYSE: KO, NYSE: MMM, NYSE: MRK, Nasdaq: MSFT, NYSE: PFE, NYSE: PG, NYSE: T, NYSE: TRV, NYSE: UTX, NYSE: VZ, NYSE: XOM, NYSE: DE, NYSE: TIF, NYSE: CO, NYSE: FRO, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, NYSE: ICE, Nasdaq: NDAQ

Layoffs Run High

Friday offers the Employment Situation data from the U.S. government, but we received three other important economic data points this week that also offer insight into the situation. One report I found interesting was the Challenger Job-Cuts data.

When Challenger, Gray & Christmas reported announced corporate layoffs had drifted 23% off of July, the popular press ran with the headline and left important details out. As always, I feel it’s my duty to keep you informed about the true state of affairs. While the August layoff count was lower than July, it was also 47% higher than last year’s count. It’s irresponsible not to note that July’s total announced layoffs of 66,414, was the highest in 16 months. Thus, the 51,114 declared dismissals in August are still greatly significant and a negative factor for investor consideration.

Over the last three months, the year-to-date layoff count has closed in on last year’s total. Yet, before that, layoffs were running at a much more encouraging rate. This is a sign of economic deterioration, the latest in a series. Through August, announced layoffs are now just 2.9% below the eight month total of 2010.

Unfortunately, the public sector led the firing brigade in August, letting 18,426 people go. For the year now, the government (both local and federal) has cut workforce by 105,406. Just to give you an idea of how important this is, Challenger tells us the next closest segment was Retail with its 40,173 firings, with 5,901 of those coming in August. That’s right, retail, which supposedly benefited from personal spending growth in July, is leading the private sector in layoffs this year.

The layoffs in government are “unfortunate,” since the government should be driving economic recovery by creating jobs both in the private and public sector. It has direct control over what occurs in the public sector, but fiscal mismanagement and political positioning have disturbed the natural course of action. Hopefully the President will have a change in course to report in his speech on September 8, because public work projects will go much farther toward restoring our economic health than most of the other stimulants attempted by both the Bush and Obama Administrations. Do you remember those misguided and irrelevant $300 checks the Bush Administration flailed out as a short-term fix to a bleeding artery? I do. What we need to do now is get some of the people in the hardest hit industry back to work, construction workers.

In August, it was the federal government that levied most of the pink slips, cutting back military personnel. However, the lull in local government cuts should not last for long, considering ongoing declines in revenue and a dwindling amount of federal support.

What gives me anxiety now is that this report covers announced corporate layoffs, and therefore excludes many of the most important employers within the nation, small businesses. The Small Business Optimism Index has taken on a new name of late, given to it by the lead economist at the National Federation of Independent Business (NFIB), the “Pessimism Index.” The Employment Situation Report will likely shed more light on the small business situation. However, given that corporations are likely freezing hiring now, as some increase firings, and with the government shedding jobs instead of creating them, I’m looking for labor market deterioration before better days dawn, assuming they do.

Article should interest investors in Paychex (Nasdaq: PAYX), Manpower (NYSE: MAN), Robert Half International (NYSE: RHI), 51Job Inc. (Nasdaq: JOBS), Monster World Wide (NYSE: MWW), Korn/Ferry International (NYSE: KFY), Administaff (NYSE: ASF), Kforce (Nasdaq: KFRC), TrueBlue (NYSE: TBI), Dice Holdings (NYSE: DHX), Kelly Services (Nasdaq: KELYA), SFN Group (NYSE: SFN), CDI Corp. (NYSE: CDI), Cross Country Healthcare (Nasdaq: CCRN), On Assignment (Nasdaq: ASGN), AMN Healthcare Services (NYSE: AHS), Barrett Business Services (Nasdaq: BBSI), Hudson Highland Group (Nasdaq: HHGP), StarTek (NYSE: SRT), RCM Technologies (Nasdaq: RCMT), VirtualScopics (Nasdaq: VSCP), American Surgical (OTC: ASRG.OB), Medical Connections (OTC: MCTH.OB), iGen Networks (OTC: IGEN.OB), St. Joseph (OTC: STJO.OB), General Employment Enterprises (NYSE: JOB), Total Neutraceutical (OTC: TNUS.OB), TeamStaff (Nasdaq: TSTF), Stratum (OTC: STTH.OB), Purespectrum (OTC: PSRU.OB), Corporate Resource Services (OTC: CRRS.OB), Bank of America (NYSE: BAC), J.P. Morgan Chase (NYSE: JPM), Goldman Sachs (NYSE: GS), Citigroup (NYSE: C), Morgan Stanley (NYSE: MS), Wells Fargo (NYSE: WFC), TD Bank (NYSE: TD), PNC Bank (NYSE: PNC), General Electric (NYSE: GE), Wal-Mart (NYSE: WMT), McDonald's (NYSE: MCD), Alcoa (NYSE: AA), American Express (NYSE: AXP), Boeing (NYSE: BA), Caterpillar (NYSE: CAT), Cisco Systems (Nasdaq: CSCO), Chevron (NYSE: CVX), DuPont (NYSE: DD), Walt Disney (NYSE: DIS), Home Depot (NYSE: HD), Hewlett-Packard (NYSE: HPQ), IBM (NYSE: IBM), Intel (Nasdaq: INTC), Johnson & Johnson (NYSE: JNJ), Kraft (NYSE: KFT), Coca-Cola (NYSE: KO), 3M (NYSE: MMM), Merck (NYSE: MRK), Microsoft (Nasdaq: MSFT), Pfizer (NYSE: PFE), Procter & Gamble (NYSE: PG), AT&T (NYSE: T), Travelers (NYSE: TRV), United Technologies (NYSE: UTX), Verizon (NYSE: VZ), Exxon Mobil (NYSE: XOM).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.