Job cuts by US employers in December last year fell to their lowest level since the recession began in 2007, offering a hope that the job market will improve in the current year, but 2009 saw the heaviest downsizing with a total of over 1.28 million layoffs, a report said on Thursday.

Employers announced plans to eliminate 45,094 jobs during December 2009, 73 per cent down from the 166,348 job cuts recorded the same month a year ago. The December 2009 total was the lowest since December 2007, city-based global outplacement consultancy Challenger, Gray & Christmas said.

However, with a total of 12,88,030 layoffs in 2009, the year saw the heaviest downsizing since 2002. The 2009 job cuts were 5.3 per cent higher than the 12,23,993 announced in 2008. Industrial goods, automotive, government/non-profit and apparel sector saw the maximum number of job cuts last year.

“It definitely was a bi-polar year when it came to downsizing. In the first half of 2009, the economy was reeling from the ongoing housing market collapse, bank failures and the further deterioration of the country’s manufacturing base; the automotive industry in particular,” CEO of Challenger Gray & Christmas, John Challenger said.

He added that during the second or third quarter, “we turned a corner and now as we begin 2010, there are promising signs of continued improvement”.

The pace of downsizing fell by 56 per cent in the second half of 2009 as compared to cuts announced between January and June. Among the promising signs were decreased job cuts in the industries hit hardest by the recession.

Job cuts in the automotive industry, which saw the heaviest downsizing of the year with 1,74,192 total cuts, fell 54 per cent in the second half of the year.

The government and non-profit sector was hit hard by falling tax revenue and many local and state governments still find their budgets in the red. However, the second largest job-cut sector experienced a 33 per cent decline in layoffs over the last six months.

Job cuts in the industrial goods manufacturing sector and retail too witnessed huge decline in July-December 2009 as compared to the first six months of the year.

Challenger said decline in job cuts may have resulted from the government’s stimulus activities, increased confidence among business leaders, cost-savings through wage freezes or reductions and involuntary furloughs.

“The recovery from this recession will undoubtedly be slow. The slowdown in job cuts is just half the battle. The next step is increased hiring, which is always the slowest part of the bust and boom cycle, as cautious employers are reluctant to add too many workers too soon for fear of a recessionary relapse,” Challenger said.

It would take several months to re-absorb the nearly 8.2 million workers who became unemployed.

“It could be another year or more before job creation is strong enough to trigger a significant decline in the unemployment rate,” the report said.

Through 2009, US employers announced plans to hire for 2,72,573 jobs, lead by the retail and government/non profit sectors.