Economic recovery continues to be stalled by the lack of job growth as the number of planned layoffs by U.S. based employers increased by 11.6% in June.

According to a new report on downsizing by research firm Challenger, Gray & Christmas, the number of layoffs rose for the second consecutive month after reaching a four month low in April. Despite the increase, the total number of layoffs announced in the second quarter was down 12% from the first quarter to 115,057 from 130,749.

“The employment picture remains a bit cloudy. Continued slowness in the pace of job cuts is certainly promising. However, hiring is coming in spurts and is not quite robust enough to make a significant dent in unemployment,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

The government sector has contributed the largest number of job cuts amounting to 10,176 of the layoffs announced in June and a total of 77,591 thus far in 2011. Although this is a month-over-month increase, this amount is down by 22% from the same period in 2010. The retail sector, second ranked for job cuts, is also down 12% from last year at 23.027 job reductions.
However the remaining top 5 industries for job cuts continue to see increases in announced layoffs. Aerospace/Defense industry job reductions have increased by 241% in 2011 to 20,851. Weakness in the financial services and industrial goods sectors rounded out the top five with 18.5% and 28% increases, respectively.

Challenger notes that the increase in job cuts is a concern but are not significant enough to sound alarm bells. The larger concern is the apparent weakness in job growth through the remainder of 2011.

“As for the remainder of the year, we don’t see much indication of a second-half surge in job-cut activity. The hiring picture is a little cloudier. While the government attempts to enact policies that will spur job creation, it really comes down to consumer and business demand for products and services and, right now, that demand remains relatively weak,” said Challenger.