A UPS driver makes a delivery on January 30, 2024 in Miami Beach, Florida.
Joe Raedle | Getty Images
Companies announced the highest level of job cuts in January since early 2023, a potential trouble spot for a labor market that will be in sharp focus this year, according to a report Thursday from Challenger, Gray & Christmas.
The job outplacement firm said planned layoffs totaled 82,307 for the month, a jump of 136% from December though still down 20% from the same period a year ago.
It was the second-highest layoff total and the lowest planned hiring level for the month of January in data going back to 2009.
Technology and finance were the hardest-hit sectors, with high-flying Silicon Valley leaders such as Microsoft, Alphabet and PayPal announcing workforce cuts to start the year. Amazon also said it would be cutting as did UPS in the biggest month for layoffs since March 2023.
“Waves of layoff announcements hit US-based companies in January after a quiet fourth quarter,” said Andrew Challenger, senior vice president of the firm. The cuts were “driven by broader economic trends and a strategic shift towards increased automation and AI adoption in various sectors, though in most cases, companies point to cost-cutting as the main driver for layoffs,”
Financial sector layoffs totaled 23,238, the worst month for the sector since September 2018. Tech layoffs totaled 15,806, the highest since May 2023. Food producers announced 6,656, the highest since November 2012.
“High costs and advancing automation technology are reshaping the food production industry. Additionally, climate change and immigration policies are influencing labor dynamics and operational challenges in this sector,” Challenger said.
The report follows news Wednesday from ADP that private payrolls increased by just 107,000 for the month. On Friday, the Labor Department will be releasing its nonfarm payrolls count, which is expected to show growth of 185,000.
Initial jobless claims totaled 224,000 for the week ended Jan. 27, up 9,000 from the previous week. Continuing claims, which run a week behind, jumped by 70,000, the Labor Department reported Thursday.