NEW YORK (CNNMoney.com) -- The pace of U.S. job losses has significantly slowed, according to a report released Wednesday.
Outplacement firm Challenger, Gray & Christmas Inc. reported that the number of job cuts announced in June fell for the fifth straight month, after reaching a seven-year high in January.
Challenger said job cut announcements by U.S. employers totaled 74,393 in June, a 33% decline from May. It was the lowest total since March 2008 and 9% lower than the number of job cuts announced in the same month a year ago, according to Challenger.
"This recent drop-off may be indicative of an overall downward trend in layoff activity," said John Challenger, chief executive officer of Challenger, Gray & Christmas said in a statement.
However, states struggling with severe deficits are still laying off a substantial number of workers, according to the report. The government/non-profit sector was hit the hardest for the fourth month in a row, with 19,438 announced job cuts in June. The automotive sector had the second highest tally of planned cuts, followed by the transportation industry.
"The government and non-profit sector will continue to be a source of heavy job cutting for the remainder of the year. States and local municipalities are running significant budget deficits and have no option but to keep making cutbacks in services and personnel. Even after an injection of federal stimulus money, many states will still be in the red," Challenger said.
"Meanwhile, job cuts in financial services, industrial-goods manufacturing, computer and consumer products have slowed considerably and may continue to do so with the economy stabilized. It could be several more months before we see hiring make a comeback, but it appears that many employers have reached the staffing levels they need to make it through the recession," he added.
The financial services industry, which was the hardest hit in 2008, announced a mere 2,085 job cuts in June.
Altogether, employers have announced nearly 900,000 job cuts so far this year -- the largest total since Challenger began tracking the figures in 1989.
The government's monthly jobs report is due Friday. The Labor Department report is expected to show that the economy shed 370,000 jobs in June, slightly more than the 345,000 reported for May, according to a consensus estimate of economists compiled by Briefing.com. The unemployment rate is predicted to rise to 9.6% from 9.4%