The pace of job cuts by U.S. employers accelerated in February, a sign the labor market is starting to deteriorate in the face of ongoing inflation and high interest rates.
That is according to a new report published Thursday by Challenger, Gray & Christmas, which found that companies planned 84,638 job cuts in February, a 3% increase from the previous month and a 9% jump from the same time last year.
It marked the highest layoff total for the month of February in data going back to 2009.
“As we navigate the start of 2024, we’re witnessing a persistent wave of layoffs. Businesses are aggressively slashing costs and embracing technological innovations, actions that are significantly reshaping staffing needs,” said Andy Challenger, senior vice president of Challenger, Gray & Christmas.
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Technology companies bore the brunt of the job losses in February, with the industry shedding 12,412 employees. In total, the tech sector has lost 28,218 jobs since the start of the year.
Financial firms followed with 26,856 layoffs since the start of the new year, a 54% increase from the same period last year.
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Industrial goods manufacturing companies have also seen a sharp jump in layoffs so far this year, slashing 7,806 positions – a stunning 1,754% increase from last year. Energy companies have also announced 1,059% more cuts than during the same period in 2023.
Another source of layoffs in February was education, which trimmed 6,336 positions last month, a significant increase from the 607 layoffs announced in January and February 2023.
The top reason cited for job cuts last month was restructuring. Companies blamed stores closing and economic and market conditions for the layoffs, as well. Only 383 job cuts were attributed to artificial intelligence so far this year; instead, companies are blaming layoffs on updating or incorporating new technology, which has accounted for 15,225 layoffs.
“In light of the backlash some companies have faced for directly attributing job cuts to artificial intelligence, they appear to be framing this shift as a ‘technological update’ rather than an outright substitution of human roles with AI,” Challenger said. “In truth, companies are also implementing robotics and automation in addition to AI. It’s worth noting that last year alone, AI was directly cited in 4,247 job reductions, suggesting a growing impact on companies’ workforces.”
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The labor market has remained historically tight over the past year, defying economists’ expectations for a slowdown. Although economists say it is beginning to normalize after last year’s blistering pace, it is nowhere near breaking.
The data precedes the release of the more closely watched February jobs report from the Labor Department on Friday morning, which is expected to show that employers hired 200,000 workers, following a gain of 353,000 in January.
The unemployment rate is expected to hold steady at 3.7%.
