Layoffs Unusually High for This Time of Year, New Report Shows. Should You Worry?

Companies are laying off more workers than usual for this time of year, according to a new report that paints a different picture of the job market than recent government reports.

U.S. employers announced 72,800 job cuts in September, down consulting firm Challenger, Gray & Christmas said Thursday. That figure, not adjusted for seasonal patterns, was 3,000 fewer than in August, but was the most layoffs for any September since 2020.

The monthly Challenger report has shown an increase in layoffs in 2024 compared to last year, while surveys from the Bureau of Labor Statistics indicate employers have slowed hiring but have kept layoffs near historic lows. Unemployment claims have also stayed relatively low, according to weekly reports from the Department of Labor.  

Jobs Data Coming into Focus For Federal Reserve

The Challenger report provides a snapshot of the health of the labor market at a time when job data is under a microscope by financial market participants and policymakers at the Federal Reserve. Fed officials cut the central bank’s benchmark interest rate in September for the first time in four years as they switch from inflation-fighting mode to boosting the economy and the job market, which has slowed down in recent months.

Economists usually give more weight to government reports on the labor market than to private data sources like the Challenger report. However Fed officials do look at those independent reports and take them into account when setting policy. 

Is This A Harbinger of Labor Market Trouble?

A highly anticipated jobs report due Friday from the Bureau of Labor Statistics will shed more light on how the job market did in September. The reading could influence how fast and far the Fed cuts rates, pushing down borrowing costs on all kinds of loans, in the coming months. 

Lower interest rates could spur more consumer spending and make it easier for companies to borrow money to hire more workers, both improving the job picture. But high interest rates over the past two years have taken a toll on business, and could still drag down the job market.

“We’re at an inflection point now, where the labor market could stall or tighten,” Andrew Challenger, senior vice president of Challenger, Gray & Christmas, said in a press release. “It will take a few months for the drop in interest rates to impact employer costs, as well as consumer savings accounts. Consumer spending is projected to increase, which may lead to more demand for workers in consumer-facing sectors.”