US Planned Layoffs Decrease in September, According to Recruitment Firm Challenger – Reuters

U.S. layoff announcements decreased in September compared to August, which had reported the highest monthly total in five months, according to workforce reduction data released on Thursday. Companies reported a total of 72,821 layoffs in September, a 4% decline from August’s 75,891 layoffs.

Year-to-date totals indicate that 609,242 layoffs have been announced through September, representing a 0.8% increase from the same period last year. This marks the first time this year that the current total has surpassed the previous year’s figures and is the highest recorded since 2020, when nearly 2.1 million layoffs were reported during the first nine months amid the COVID-19 pandemic.

Interestingly, this rise in layoff announcements has not been reflected in other job loss metrics, such as the weekly unemployment benefits claims reported by the Labor Department. For instance, new claims fell to a four-month low in the week ending September 21, and overall benefits rolls have remained relatively stable recently.

“We’re at an inflection point now, where the labor market could stall or tighten,” noted Andrew Challenger, senior vice president of Challenger, Gray and Christmas.

Signs suggest that the U.S. job market is cooling down, prompting the Federal Reserve to shift its focus toward supporting employment after primarily concentrating on combating inflation since early 2022. As inflation approaches its targeted 2% rate, the Fed recently reduced its benchmark interest rate by half a percentage point and predicts further cuts may be forthcoming, with the aim of alleviating financial pressures on households and businesses, thereby supporting job growth.

Challenger emphasized that it may take some time for the reduction in interest rates to have an effect on employer expenses and consumer savings. He projects that increased consumer spending could result in greater demand for workers in sectors that cater directly to consumers.

In September, the technology sector led with 11,430 announced job cuts, although layoffs in this industry have decreased by 23% compared to last year. Other major industries, including healthcare, services, and finance, have also reported fewer layoffs this year compared to the previous one.

Artificial intelligence has been cited as a contributing factor for nearly half of the job cuts within the tech sector. Since AI-related layoffs began being tracked in May 2023, approximately 17,000 job losses have been linked to this technology.

The Challenger report precedes the upcoming nonfarm payrolls report scheduled for release by the Bureau of Labor Statistics. An economist poll anticipates that the report will show employers added around 140,000 jobs in September, nearly unchanged from the 142,000 positions added in August, while the unemployment rate is expected to hold steady at 4.2%.