More than one-third of the U.S. jobs lost in February were the result of the decline in oil prices, according to global outplacement consultancy Challenger, Gray & Christmas Inc.
The firm’s monthly report, issued Thursday, said that overall, domestic workforce reductions totaled 50,579, down 5% from January but 21% higher than in February 2014. Through the first two months of this year, employers announced 103,620 planned layoffs, up 19% from the first two months of 2014.
"Once again, the energy sector saw the heaviest job cutting in February, with these firms announcing 16,339 job cuts, due primarily to oil prices," the firm reported.
Declining oil prices have been responsible for 39,621 job cuts since the start of the year, about 38% of all recorded workforce reductions. In February, 36% of all job cuts (18,299) were blamed on oil prices.
"Oil exploration and extraction companies, as well as the companies that supply them, are definitely feeling the impact of the lowest oil prices since 2009," CEO John A. Challenger said. "These companies, while reluctant to completely shutter operations, are being forced to trim payrolls to contain costs."
The announced workforce reductions in the U.S. energy industry have been across the board, with oilfield services companies reporting some of the biggest cutbacks to date. Schlumberger Ltd., Halliburton Co., Baker Hughes Inc., Weatherford International plc and FMC Technologies have cut thousands of jobs since the start of the year (see Shale Daily,Feb. 11;Feb. 5;Jan. 20;Jan. 16). Nabors Industries Ltd. this week said it would lay off more than 3,000 people.
Many majors and independents also have announced big layoffs (see Daily GPI, Jan. 26). Vendors, including U.S. Steel, also have laid off thousands and closed facilities. In the past week, WPX Energy Inc. and Range Resources Corp. each said they would cut their workforces by 8% (see Shale Daily,March 4;Feb. 25).
"While oil-related companies will see profits slide, the net impact of falling oil prices will likely be positive for the economy, as a whole," Challenger said. Some economists estimate that the gross domestic product, or GDP, "could see a 0.5 percentage point boost from low oil prices, due mostly to the extra spending power among consumers. Meanwhile, companies that are big users of oil, such as transportation firms, airlines, and manufacturers of plastic and paint products will see higher profits thanks to cheap oil."
Cheap oil has not helped to stem the tide of job cuts in the retail sector, which saw the second highest number of job cuts in February with 9,163. Recent hiring announcements "indicate that automotive and transportation firms are starting to see the benefits. Last month, transportation firms announced plans to hire 5,236, while automotive firms plan to add 3,185.
"These reports probably represent just a small fraction of actual job creation, since most employers do not formally announce hiring plans," Challenger said. In all, announced hiring plans totaled 14,574 in February, up 66% from January.