Key Points:
- Layoffs in August reached their highest level for the month in 15 years, while hiring in 2024 is at its lowest in 19 years, according to a Challenger, Gray & Christmas report.
- The technology sector saw the biggest rise in layoffs, with companies announcing 41,829 job cuts, the highest in 20 months.
Layoffs spiked in August, marking the highest total for the month in 15 years, as companies continue to grapple with economic uncertainty. According to a report by outplacement firm Challenger, Gray & Christmas, the number of announced job cuts hit 75,891—an increase of 193% from July. This surge is just 1% higher than August 2023 but represents the highest August total since 2009, a period still recovering from the global financial crisis.
On the flip side, hiring announcements have dwindled. Companies revealed plans to hire just 6,101 new workers in August, up slightly from July but down more than 21% compared to the same month in 2023. Year-to-date hiring now stands at roughly 80,000, the lowest figure recorded since 2005, indicating a historic slump in workforce expansion.
“August’s surge in job cuts reflects growing economic uncertainty and shifting market dynamics,” said Andrew Challenger, Senior VP at Challenger, Gray & Christmas. “Companies are navigating rising operational costs and concerns about a potential economic downturn, prompting tough decisions on workforce management.”
The report coincides with concerns that the labor market is showing signs of weakness, despite a year-to-date nonfarm payroll growth of 1.4 million. On Wednesday, payrolls processing firm ADP reported that private companies added only 99,000 workers in August—the smallest monthly gain since January 2021.
This weakening job outlook could push the Federal Reserve toward lowering interest rates later this month, even as inflation remains above the central bank’s 2% target.
However, the Challenger data is somewhat at odds with government statistics. Recent unemployment benefit claims have hovered around slightly elevated levels, but they haven’t suggested a sharp escalation. For the week ending August 31, jobless claims totaled 227,000, a slight dip from the previous week.
The technology sector saw the sharpest rise in layoffs, with companies announcing 41,829 job cuts—the highest figure in 20 months.
“The labor market overall is softening,” added Challenger.
Companies most frequently cited cost-cutting and economic conditions as the reasons for layoffs. Interestingly, artificial intelligence (AI) was also listed as a reason for workforce reductions for the first time since April.
Source: CNBC
