The number of job cuts by American employers surged in January as companies looked to lower operating costs to adjust to harsh economic conditions, according to outplacement firm Challenger, Gray and Christmas, Inc.
The number of positions cut by employers in January jumped 136%, with 82,307 positions cut compared to the 34,817 cut in December, according to a report from Challenger, Gray and Christmas. The job cuts come amid a wider U.S. layoff trend due to broader economic struggles, like inflation and adjustments from automation. (RELATED: ‘Can’t Last Forever’: Federal Debt Grew More Than Twice The Economy Last Quarter)
“Waves of layoff announcements hit US-based companies in January after a quiet fourth quarter,” Andrew Challenger, senior vice president of Challenger, Gray and Christmas, said in the report. “As we step into 2024, the landscape is shaped by stabilizing prices and the anticipation of falling interest rates. It is also an election year, and companies begin to plan for potential policy changes that may impact their industries. However, these layoffs are also driven by broader economic trends and a strategic shift towards increased automation and AI adoption in various sectors, though in most cases, companies point to cost-cutting as the main driver for layoffs.”
Initial UI claims climb to 224k while continuing claims rise to 1.9 million as layoffs increasingly filter through to longer-term unemployment – JOLTS data seems increasingly reliable, at least the downward trend of hires and quits; expect UI claims to continue rising… pic.twitter.com/SKn5aSP0JO
— E.J. Antoni, Ph.D. (@RealEJAntoni) February 1, 2024
The financial sector experienced the most job cuts in January, laying off 23,238 employees, the highest monthly total since September 2018, according to the report. The technology sector had the second most in the month, cutting 15,806, up 254% from December.
U.S. employers had plans to only hire 5,376 workers in January, the lowest total for January in any year on record but up 78% compared to December, according to the report. The number of layoffs year-over-year in January was down by 20%.
High inflation has continued to plague both consumers and businesses, remaining elevated in December at 3.4% year-over-year, far above the Federal Reserve’s 2% target. In response to high inflation, the Fed has placed its federal funds rate in a range of 5.25% and 5.50%, raising the cost of credit and dampening economic growth.
A number of high-profile large companies have announced layoffs in January, including the United Parcel Service, which announced it was cutting 12,000 jobs to adjust to higher labor costs related to a new union deal. Numerous legacy media outlets have announced large cuts as well, including the Los Angeles Times, Forbes, Insider, The New York Daily News and more.
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