Layoffs in the United States hit a more than two-year high in January as technology firms cut jobs at the second-highest pace on record to brace for a possible recession, a report showed on Thursday.
The layoffs impacted 1,02,943 workers, a more than two-fold jump from December and an over five-times surge from a year earlier, according to the report from employment firm Challenger, Gray & Christmas.
Companies from Microsoft to Amazon.com and Goldman Sachs Group cut thousands of jobs last month in a bid to ride out a demand downturn as consumer and corporate spending shrinks due to high inflation and rising interest rates.
“We’re now on the other side of the hiring frenzy of the pandemic years,” said Andrew Challenger, labor expert and Senior Vice President of the employment firm. “Companies are preparing for an economic slowdown, cutting workforce and slowing hiring.”
The push to correct pandemic excesses has been most evident in the tech sector, which slashed 41,829 jobs last month, the highest across industries.
Retailers, second after tech, cut 13,000 positions in January, compared with virtually no layoffs a year earlier. Financial firms, meanwhile, shed 10,603 jobs last month, up from 696 roles a year earlier.
With the Federal Reserve expected to continue on its rate-hiking path to stamp down inflation that is still on the higher side after several rounds of rate increases, analysts said more layoffs could be in store for US companies.
“For companies that ramped up headcount over the past few years, they will likely shrink their workforce as the economy is headed towards a rough patch,” OANDA analyst Edward Moya said.
© Thomson Reuters 2023