Firms announced 72,821 layoffs last month, down 4% from the 75,891 announced in August, which had been the highest since March, outplacement firm Challenger, Gray and Christmas said.
For the year-to-date, however, announced staff reductions through September of 609,242 are 0.8% higher than through the first nine months of 2023, exceeding the prior year’s running total for the first time this year. That running total is the highest since 2020, the year the COVID-19 pandemic struck, when nearly 2.1 million layoffs were announced through that year’s first nine months.
That increase, however, has not so far been paralleled by other data measuring job losses, such as the Labor Department’s weekly report on filings for unemployment benefits. In the week ended Sept. 21, for instance, filings for new claims slid to a four-month low and the level of overall benefits rolls has shown little change in recent months.
“We’re at an inflection point now, where the labor market could stall or tighten,” said Andrew Challenger, senior vice president of Challenger, Gray and Christmas.
There are signs the U.S. job market is cooling off, enough so that the Federal Reserve has shifted its efforts to defending employment after a singular focus on battling inflation beginning in early 2022. With inflation now nearing its 2% target, Fed officials last month cut their benchmark interest rate by half a percentage point and forecast more cuts ahead, hoping that will ease financial pressures on households and businesses and allow job growth to continue.
“It will take a few months for the drop in interest rates to impact employer costs, as well as consumer savings accounts,” Challenger said. “Consumer spending is projected to increase, which may lead to more demand for workers in consumer-facing sectors.”
The technology sector led the September total with 11,430 announced job cuts, though the industry has seen 23% fewer reductions so far this year than in 2023. Indeed, other major sectors like healthcare, services and finance have also seen fewer announcements this year than last.
Artificial intelligence was cited as the reason for nearly half of the tech sector’s cuts. Since AI has been tracked as a reason for layoffs in May 2023, nearly 17,000 job cuts have been attributed to it.
The Challenger report comes ahead of the monthly nonfarm payrolls report due Friday from the Bureau of Labor Statistics. According to a Reuters poll of economists, that is expected to show employers added 140,000 new jobs in September, little changed from the 142,000 positions created in August. The unemployment rate is forecast to remain unchanged at 4.2%.
Source: Economy - investing.com
