3 Sectors Handing Employees Pink Slips
America's economic hamster seems to be well on its way to getting people back to work. The March jobs report came as a disappointment to many, with only 120,000 new jobs created -- far below the recent three-month average of 246,000 -- but it did serve to lower unemployment to 8.2%. Moreover, the jobless claims rate is at its lowest level in four years.
But as with every economic recovery in the past, there must always be laggards. Just because some Americans are finally getting back to work doesn't mean the sun is shining on every sector. Here are three such sectors where the pink slips are still flowing like water.
Back in January, I noted how numerous pharmaceutical companies were putting up their "no vacancy" signs in anticipation of what is expected to be an unparalleled year of drug patent expirations. AstraZeneca is slated to lose its blockbuster schizophrenia drug Seroquel and responded in February by notifying 7,300 employees that their services would no longer be needed. AstraZeneca has shed just shy of 30,000 jobs since 2006. Pfizer (NYS: PFE) recently announced what it currently sees as its final phase of layoffs -- 16,300 jobs, to be exact -- in what has been a cost-cutting campaign aimed at eliminating 55,400 jobs in response to slowing sales growth. Even Merck (NYS: MRK) , which has been more or less immune to patent expirations, shed an estimated 12,500 jobs in 2011.
The CEOs of some of the nation's biggest banks are receiving healthy boosts in pay, but that generosity isn't trickling down in any way to their employees. Citigroup's (NYS: C) Vikram Pandit recently had his compensation lifted from $1 million to $15 million, despite his laying off 4,500 employees. Brian Moynihan, head of Bank of America (NYS: BAC) , is overseeing the purging of 30,000 jobs at his bank over the next few years in hopes of saving $6 billion annually. Investment bankers have suffered as well, with speculation that Goldman Sachs may lay off up to 20% of its investment banking workforce.
Aerospace and defense
Somehow you just sort of knew that when the U.S. government said it needed to trim the federal budget by more than $2 trillion, the defense sector would feel the brunt of it. The $500 billion worth of cuts being implemented over the next decade would likely "dismantle" the U.S. aerospace and defense sector, according to Robert Stevens, CEO of Lockheed Martin (NYS: LMT) . Mr. Stevens cautioned Congress that not only is his company not currently hiring, but that any budget cuts would lead to mass layoffs within the sector. Northrop Grumman has already begun shedding jobs in small batches, but once those government contracts begin drying up, its layoff figures could soar.
As much as we hate to believe it, the jobs market is still in a fragile state, and we should keep this in mind despite the recent optimistic data. We're going to need at least one of these three sectors to turn around if we are to have any hope of staging a push below 8% unemployment in my opinion.
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At the time this article was published Fool contributor Sean Williams owns shares of Bank of America, but he has no material interest in any other companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of Citigroup, Bank of America, Lockheed Martin and Northrup Grumman. Motley Fool newsletter services have recommended buying shares of Goldman Sachs and Pfizer. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy that will never fire you.
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