A latest report on Thursday indicates that layoffs by U.S. companies over January and February touched the highest since 2009.
Job Cuts This Year
In this scenario, the tech sector is accounting for more than a third of the over 180,000 job cuts as per the announcement.
The report from employment firm Challenger, Gray & Christmas Inc showed that in February alone, layoffs in the United States stood at 77,770.
Interestingly, it is more than five times higher than the 15,245 job cuts announced a year earlier.
Further, the number of Americans filing new claims for unemployment benefits rose to 21,000 in the week ended March 4.
Again, this is the biggest increase in five months according to the Labor Department.
Why Would This Happen?
The senior vice president of Challenger, Gray & Christmas Inc, Andrew Challenger said, “Right now, the overwhelming bulk of cuts are occurring in Technology. Retail and Financial are also cutting right now, as consumer spending matches economic conditions,”.
From the start of this year, Tech companies from Microsoft Corp and Google-parent Alphabet Inc to PayPal Holdings have cut thousands of jobs.
Notably, the move is an effort to curb spending and protect margins amid an uncertain economic outlook.
The chief investment officer at asset management firm Alliance Bernstein, James Tierney said, “the layoffs that many of these companies are announcing are welcome to investors, sort of right-sizing the cost structure, and rationalizing growth is being rewarded in the marketplace,”.
In the meantime the shares of Alphabet, Microsoft, Amazon.com Inc and Meta Platforms Inc have gained between 6% and 54%, after falling between 29% and 64% in 2022.
On Wednesday, Federal Reserve Chair Jerome Powell reaffirmed his message of higher and potentially faster interest rate hikes.
But it could not be denied that this could force companies to slash more jobs.
In the meantime, the U.S. firms announced plans to hire 28,830 workers in February, down 87% from 215,127 a year earlier, the report added.
