Housing job cuts surge four-fold

NEW YORK CITY, N.Y.
April 4, 2007 4:54am

Planned job cuts plunged to a eight-month low in March, but troubles in the home-building sector continued to take a toll, with the housing-related industries of real estate, construction and mortgage lending announcing nearly as many job cuts in the first three months of 2007 as in all of 2006, according to figures released Wednesday by outplacement consultancy Challenger, Gray & Christmas Inc.

Employers announced 48,997 cuts in March, 42 percent fewer than the 84,014 job cuts in February and the lowest level since last July (37,178), Challenger says.

March was 25 percent lower than in the same month a year ago, when 64,975 job cuts were announced, according to the Challenger report.

But job cuts in housing-related industries (real estate, construction and mortgage lending) surged 346 percent to 21,245 from 4,764 in the first quarter a year ago. The first-quarter total for these three sectors nearly matches the 2006 total of 22,814.

“While many have predicted that the housing market has hit bottom, the situation seems only to worsen as home builders continue to report slumping orders,” says said John Challenger, chief executive officer of Challenger, Gray & Christmas.

“Now we are seeing the impact hit traditional as well as sub-prime mortgage lenders as demand for loans declines and the number of foreclosures skyrockets,” he says.

First-quarter job cuts totaled 195,986, 23 percent lower than the 255,878 job cuts announced in the first three months of 2006. First-quarter job cuts were 2.5 percent lower than the fourth quarter of 2006.

Financial institutions led all other industries in job cuts in March, with 7,070 announced cuts. Of those, 4,478 or 63 percent were among mortgage lenders.

Housing-related industries are not the only ones cutting more jobs. Pharmaceutical firms announced 14,018 job cuts in the first quarter, more than triple the 4,195 job cuts by these companies in the first three months of 2006.

Media job cuts have increased 93 percent, going from 2,274 in the first quarter of 2006 to 4,391 in the first quarter of this year.

“Despite some signs that the economy may be cycling down, the job market appears to be strong. It does not appear that weakness in the housing market is leaking to other areas of the economy in the form of job cuts. The increased cuts among pharmaceutical and media firms are due mainly to changing dynamics in those sectors,” says Mr. Challenger.