AT&T Inc. (ATT, News) joined the recession’s parade of layoffs Thursday by announcing plans to cut 12,000 jobs, about 4 percent of its work force.
The Dallas-based telecommunications company - the nation’s largest - said the job cuts will take place in December and throughout 2009. The company also plans to reduce capital spending next year.
Spokesman Walt Sharp said the layoffs will be “across the company and across the country,” but would not specify what departments and cities would be most affected. These layoffs come on top of 4,600 jobs the company said in April it would eliminate.
The new cuts come as AT&T finds itself pulled by two currents at once. Not only is the recession leading businesses and consumers to curtail spending, but a long-term trend in the telecom industry is also at play: AT&T, which provides local phone coverage in California, Texas and 20 other states, has been seeing many customers defect from landline phones to wireless services. In the last quarter, AT&T basic voice lines in service dropped 11 percent.
Telecommunications giant AT&T said today it would lay off 12,000 employees in coming months, the latest shock to a labor market that has declined steadily for a year.
In a news release this morning the company said that “economic pressures, a changing business mix and a more streamlined organizational structure” would lead it to trim its workforce by about 4 percent, beginning this month.
The announcement from AT&T comes amid a steady wave of data showing a collapse in hiring. New claims for unemployment benefits remained above half a million last week, though at 509,000 represented a dip from the week before, while ongoing claims rose 89,000 to hit 4.09 million, the highest level since the recession of the early 1980s.
The government’s latest monthly report on unemployment, due for release tomorrow, is expected to show November job losses in excess of 300,000.
Along with the AT&T layoffs announced this morning, Dupont said it would trim 2,500 workers involved in lines of business dependent on the slumping auto and housing industries.
In a sign of the slowdown’s global reach, Credit Suisse, a major player in Switzerland’s storied banking industry, said it would cut 5,300 jobs — about 11 percent of its workforce — after suffering losses of $2.5 billion over October and November.
The weak economic climate was captured in a Federal Reserve report released yesterday which found the slowdown cutting across almost every industry. Separate reports indicated that private employers shed jobs at an accelerating rate in November and that the nation’s service sector contracted.
Together, the reports suggested the recession is deepening as winter approaches.
The Fed’s “beige book,” a compilation of anecdotal reports from businesses across the nation published roughly every six weeks, found that “overall economic activity weakened across all Federal Reserve districts since the last report.”
Consumer spending weakened almost across all sectors of the economy, especially for vehicles. Tourism activity was “relatively slow.” Manufacturing “declined noticeably” since the Fed’s last report. Services business “generally contracted in most districts.”
Part of the problem was that lenders have continued to restrict credit. “Credit standards rose across the nation,” the beige book said, “with several districts noting increases in loan delinquencies and defaults, especially in the real estate sector.”
One bright spot was that price pressures had dropped, especially for energy, food and raw materials. The same was true of retail prices. “A number of district reports mentioned that retailers were widely discounting prices in anticipation of a slow holiday sales season,” the document said.
In its monthly employment report, payroll processors estimated that private businesses shed 250,000 jobs in November on a seasonally adjusted basis. It was the biggest drop in seven years and “offers evidence that the labor market continues to weaken,” ADP Employer Services said in its monthly payroll survey.
Based on data from nearly 400,000 companies, the report showed employment declines across the board as large, medium-size and small companies shed jobs, and employment contracted in all sectors of the economy.
The ADP report sets the stage for the government’s next monthly jobs report, due out tomorrow. Analysts expect that report to show another spike in unemployment and job losses that may top 300,000.
The numbers from the ADP report are “terrible,” wrote Ian Shepherdson, chief U.S. economist with the High Frequency Economics consulting firm, in an analysis of the employment numbers.
With payrolls deteriorating in both the manufacturing and service sectors, “there is nowhere to hide,” he said.
A separate study by the Institute for Supply Management showed that economic activity in the service sector fell to the lowest level since its index for the sector was first reported more than a decade ago. The ISM surveys businesses for information on hiring, new orders and other data that are formed into an overall index. A reading greater than 50 indicates a sector is expanding. The reading for November was 37.3, compared with 44.4 in October.
Even usually positive news — a rise in worker productivity — took on a dark hue. The value of hourly worker output increased by 1.3 percent from July through September, a larger increase than originally estimated, according to the Bureau of Labor Statistics. But that upward revision came only because employers cut back workers’ hours, leaving fewer employees to produce goods and services.
By Howard Schneider and Neil Irwin
Washington Post Staff Writers
Thursday, December 4, 2008; 10:10 AM