Mike Shedlock

I am starting to think the next jobs report is going to be downright miserable. New orders have plunged and mass layoffs are on the rise.

Please consider Tech sector layoffs surge to three-year high

During the first half of the year, 51,529 planned job cuts were announced across the tech sector, representing a 260 percent increase over the 14,308 layoffs planned during the first half of 2011. Things are so bad so far this year that the figure is 39 percent higher than all the job cuts recorded in the tech sector last year.

Hewlett-Packard proved to be the major force behind this year's uptick in planned layoffs, after the company announced in May that it would cut 30,000 jobs. Those layoffs will be completed by the end of fiscal 2014, and shave off 8 percent of HP's entire workforce.

It was also a tough beginning of the year for Sony and Nokia, both of which said they would lay off 10,000 employees. Panasonic and Olympus are also eyeing layoffs to make their operations more nimble.

The issue in the tech sector, according to the outplacement firm, is that success is increasingly finding its way to a short list of companies. All others are hoping they can stay afloat or revive their operations around new ideas. And all of that could lead to more cuts across the industry in the coming months.

"We may see more job cuts from the computer sector in the months ahead," John A. Challenger, CEO of Challenger, Gray & Christmas, said today in a statement. "While consumers and businesses are spending more on technology, the spending appears to favor a handful of companies. Those that are struggling to keep up with the rapidly changing trends and consumer tastes are shuffling workers to new projects or laying them off altogether."
 

In the video below Jefferies Managing Director Peter Misek discusses the coming iPhone 5 with Emily Chang on Bloomberg TV.

Misek reports the iPhone will be significantly thinner and taller because of new technology he did not expect to be available for at least another year.

What really caught my eye, however, was a segment in the middle of the video regarding grim statistics on sales and employment in China starting at about the 2:26 mark.



Link if video does not play: Details on iPhone 5 Emerge

Partial Transcript

Emily Chang: Another thing you say is smart-phone and PC demand in China is dropping off significantly. What exactly is going on there?

Peter Misek: We came back from China really depressed, I have to say. It appears that mainland China is correcting significantly. The statistics the government publishes, frankly we think are largely fabricated. So you have to rely on other statistics such as retail sales, electricity usage, mall traffic, etc. And what we saw, and what we heard was pretty grim. We think consumer electronic sales could be falling double-digits year-over-year in June and thus far in July. And we think the catalyst frankly is job losses. The premier of China was on this morning basically saying the labor situation is severe, meaning job losses are accelerating and unemployment is skyrocketing. That is causing the Chinese consumer who naturally saves more than we do, to save even more.

Plunging New Orders Everywhere

The rise in Chinese unemployment ties in perfectly with my July 6 report Plunging New Orders Suggest Global Recession Has Arrived.

The grim data also fits in with the email yesterday from Michael Pettis yesterday: "China Rebalancing Has Begun"; What are the Global Implications?


Mike Shedlock

Mike Shedlock is a registered investment advisor representative for Sitka Pacific Capital Management.
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