The Chicago-based outplacement firm Challenger, Gray and Christmas reported this morning (April 4) that job cuts in the housing related industries skyrocketed during the first quarter of 2007, reaching the total for 2006 in just one quarter.
According to Challenger, job cuts in housing jumped 346 percent to 21,245 from 4,764 in the first quarter last year, with most of the cuts coming in the construction industry. The total job cuts for housing for all of 2006 was 22,814.The housing sector is comprised of construction, real estate and mortgage lending.
Job cuts in the construction component represented the bulk of layoffs in the sector, soaring from an estimated total of 115 in last year's first quarter to 13,958 this year. Job cuts in the mortgage-lending sector nearly doubled from 3,497 last year to 6,138 this year, and real estate job losses improved slightly over last year's first quarter, from 1,152 last year to 1,149 in first quarter, 2007.
James K. Pedderson, a Challenger spokesman, said that the company only recently began collecting data specifically on the construction sector. He explained that it had been included in a larger category until late last year. Thus, the comparison between first quarter last year and this year is indirect. Still, he noted that the magnitude of the job cuts was significant. "We usually don't see double and tripling of job cut announcements," he said.
The company tracks only job cuts that are publicly announced. Pedderson said that the bulk of the job cuts in the construction sector would therefore be concentrated among the large, publicly-held builders. "We're probably missing a lot of construction," he explained. "We're missing the smaller firms who are telling a crew of 10 or 20 that they are not going to work for the next month."
The housing numbers stood in contrast to those from the overall job market. Across all sectors, 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). March was 25 percent lower than in the same month a year ago, when 64,975 job cuts were announced. Percentage wise, the biggest losers besides housing were the financial institutions, which cut 7,070 jobs, more than half of them in the mortgage lending arena; pharmaceutical companies, which cut 14,018 jobs; and media companies, which cut 4,391 jobs.
Still, the cuts in the housing sector led John A. Challenger, CEO of Challenger, Gray and Christmas, to state, "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. 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."