Ford Layoffs and the S&P 500 LinkUp Jobs Consumer Discretionary Index

Last month, in collaboration with S&P Dow Jones Indices (S&P DJI), LinkUp launched the S&P 500® LinkUp Jobs Index and related sector indices. The Index measures labor demand for companies within the S&P 500 at an aggregate, sector, and individual company level and serves as an indicator of the health of the labor market and economy as a whole.

Because the Index is constructed from job openings in LinkUp’s job search engine that are sourced directly from corporate websites daily, it provides real-time insight into the labor demand of the 500 companies and their subsidiaries in the S&P 500. Using the Index and data behind it, Molly Moseley of LinkUp explored the recently announced Ford Layoffs in relation to the consumer discretionary sector as a whole. You can view more about the launch of the Index here

Discretionary spending is up in 2019. However, while people might be buying plenty of things, it appears cars aren’t on their must-have-it-now list.

Slow Q1 sales have been commonplace for major automotive retailers since 2016.  (See below chart.) As sales lag, it’s interesting that Ford just announced it will be laying off 7,000 people by the end of August. Most of the reductions are expected overseas, with an estimated 2,300 layoffs in the United States impacting mostly managers and other salaried employees, not hourly factory workers. Ford had similar layoffs almost exactly two years ago in an effort to reduce costs and run leaner overall.

Large layoffs like these can typically be seen in job opening data. Companies often remove job openings from their website and off their “books” in order to meet layoff goals. The graph below shows Ford’s job openings in relation to fellow automaker GM, in the context of the S&P 500® LinkUp Jobs Consumer Discretionary (Sector) Index in which it falls, within the S&P 500 LinkUp Jobs Index. You’ll see that while the S&P 500 LinkUp Jobs Consumer Discretionary Index from 2016 to date is up overall (gray line), job listings at Ford and GM are down (dotted lines).

If we look at Ford data specifically, it can provide interesting insights into the current scenario. In the below graph, Ford job openings are broken out by occupation. You can see that management positions (blue) decreased mid-2017 due to the layoffs two years ago. It will be interesting to see if the same decrease in management positions will occur this year due to the new announcements.

This close look at management positions over time makes it even easier to see the dramatic dip in 2017. Keep in mind, layoffs were announced in May that year.

Job listings data may provide insight into the health of a company today and what may be just around the corner.

The posts on this blog are opinions, not advice. Please read our disclaimers.

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