U.S. businesses announced 36,836 job cuts in October, a 22% decline from the prior month and the second-lowest monthly this year, according to data from Challenger, Gray & Christmas released Thursday.
“Job cut plans have slowed significantly since the first half of the year, and consumers have continued to spend, even in the face of high inflation,” said Andy Challenger, senior vice president of Challenger, Gray & Christmas.
The declining trend seems to confirm the U.S. job market’s resiliency in the face of higher interest rates and forecasts of a future economic slowdown.
“Although the jobs-to-workers gap has narrowed, labor demand still exceeds the supply of available workers,” said Federal Reserve Chair Jerome Powell at his press conference on Wednesday.
Indeed, job openings rose to 9.6 million in September, according to the Labor Department, and weekly unemployment claims are still at low levels.
But Powell also believes tight monetary is having an effect. “Supply and demand conditions continue to come into better balance,” with the labor participation rate for some age groups rising. On Friday, Labor reported that nonfarm payrolls rose by only 150,000 in October, and the unemployment rate ticked up to 3.9%.
There’s no doubt employers have reduced their payrolls this year to keep operating costs down. Year-to-date 2023 has seen 641,350 announced job cuts versus 243,388 in 2022, according to Challenger.
Tech has led all industries in 2023, with 158,513 jobs axed in the first 10 months, up from 28,207 in the same period last year.
The Challenger Report data, October 2023
About one-third (35%) of all year-to-date job cuts were attributed to “economic or market conditions,” said Challenger, Gray, with about half that percentage citing a store, unit, or department closing. Employers blamed cost-cutting for nearly 10% of cuts, and nearly 8% resulted from restructurings.
Tech has led all industries in 2023, with 158,513 jobs axed in the first 10 months, up from 28,207 in the same period last year. Layoffs.fyi, whose layoff tracker focuses on the tech sector and captures job cuts at startups, many of which aren’t formally announced, showed more than 248,000 job cuts in 2023 as of yesterday.
Looking Ahead
The question is whether CFOs will start to trim payrolls again next year if interest rates remain at their current levels and the economy drags.
Challenger’s fall survey of human resources and business leaders showed that fewer respondents were undergoing or planning payoffs (29%) than last spring (45%).
Wednesday’s Challenger report included tallies of seasonal hiring plans for U.S. companies. So far, in September and October, companies announced 573,300 seasonal hires.
While more may be announced, “as of now, it is the lowest year for seasonal hiring announcements since 2013, when employers announced 518,000 seasonal hiring plans,” according to Challenger, Gray.
Holiday spending, according to a National Retail Federation press release on Wednesday, is forecast to grow to as much as $967 billion during November and December, up between 3% and 4% over 2022. But that would be a slightly lower growth rate than last year’s 5.4%.
