Layoffs surged in August, reaching a 15-year high for the month, as reported by outplacement firm Challenger, Gray & Christmas on Thursday. The total announced job cuts for the month were 75,891, a significant increase of 193% from July. While this figure was only 1% higher than August of the previous year, it marked the highest number for August since 2009, during the aftermath of the global financial crisis.
On the hiring front, companies reported adding 6,101 new employees in August, an increase of nearly 2,500 from July but a decrease of over 21% from the same period in 2023. The year-to-date hiring announcements of nearly 80,000 represent the lowest total since 2005.
Andrew Challenger, the senior vice president of the firm, attributed the surge in job cuts in August to increasing economic uncertainty and changing market dynamics. He mentioned that companies are under various pressures, such as rising operational costs and concerns about a potential economic slowdown, leading them to make difficult decisions regarding workforce management.
Despite the U.S. economy adding 1.4 million nonfarm payrolls this year, there are concerns about a weakening labor market. ADP, a payrolls processing firm, reported on Wednesday that private companies added only 99,000 workers in August, the smallest increase since January 2021. This has led to expectations that the Federal Reserve may reduce interest rates later this month to address the softening jobs market, even with inflation exceeding the central bank’s 2% target.
The Challenger report indicated that the technology sector saw the largest growth in planned layoffs, with companies announcing 41,829 cuts, the highest in 20 months. Companies cited reasons such as cost-cutting, economic conditions, and for the first time since April, artificial intelligence, as factors behind the job cuts.
