Feb. 4, 2005 -- American companies cut fewer than 100,000 jobs in January, the lowest level since last August.

According to outplacement firm Challenger, Gray & Christmas of Chicago, employers cut 92,351 jobs last month, a 15 percent improvement from the 109,245 jobs cut in December.

Employers cited cost-cutting as the leading reason for laying off employees, followed by mergers and acquisitions. The firm's principal, John A. Challenger, said he expected the rate of mergers and acquisitions to continue to impact employment levels throughout the year.

"Merger activity is starting to accelerate in many industries. On Monday alone there were at least three major deals announced, including the mega-merger between SBC and AT&T, which is likely to result in significant job cuts," said Mr. Challenger.

The greatest number of cuts, 11,556, was in the government and non-profit sector. Financial and automotive companies also reduced a significant number of workers, dropping 11,220 and 10,537 respectively. The telecom sector, which cut roughly 51,000 jobs in the last four months of 2004, cut just 1,429 workers in January.

Overall, compared to the same time last year, January saw 27 percent fewer job cuts.

In addition to stemming job reduction in January, employers announced plans to hire 29,832 workers, a 40 percent improvement from December.

These figures bode well for the health of the job market, said Mr. Challenger. "The fact that job cuts declined from December, as well as last January, is a sign of job market improvement, bolstered further by announced plans to add nearly 30,000 jobs in the coming weeks and months," Mr. Challenger said.