Layoffs surged 136% in January to second-highest level on record

The pace of job cuts by U.S. employers accelerated at the start of 2024, 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 by Challenger, Gray & Christmas, which found that companies planned 82,307 job cuts in January, a substantial 136% increase from the previous month. However, that is down about 20% from the same time one year ago. It marked the second-highest layoff total for the month of January in data going back to 2009.

"Waves of layoff announcements hit U.S.-based companies in January after a quiet fourth quarter," said Andy Challenger, senior vice president of Challenger, Gray & Christmas. 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 companies bore the brunt of the job losses in January, with the industry shedding 23,238 employees. That is the highest monthly layoff total for the financial sector since September 2018, when it announced 27,343 job cuts.

The technology sector followed with 15,806 layoffs, the most since May 2023 and a stunning 254% increase from just one month prior.

"The impact of rapidly advancing artificial intelligence adoption is beginning to be felt from a jobs perspective, particularly in media and tech, but truly across sectors," Challenger said. "That said, companies are not outright blaming AI for many layoff decisions."

Food production companies also accounted for a large swath of the job cuts in January, slashing 6,656 positions — the highest monthly total for the sector since November 2012. Challenger said that "high costs and advancing automation" are reshaping how the industry operates.

US Bureau of Labor Statistics

Employment Situation Summary

https://www.bls.gov/news.release/empsit.nr0.htm

Establishment Survey Data

Total nonfarm payroll employment rose by 353,000 in January, similar to the gain
of 333,000 in December. Payroll employment increased by an average of 255,000
per month in 2023. In January, job gains occurred in professional and business
services, health care, retail trade, and social assistance. Employment declined
in the mining, quarrying, and oil and gas extraction industry. (See table B-1.
See the note at the end of this news release and table A for more information about
the annual benchmark process.)

Professional and business services added 74,000 jobs in January, considerably
higher than the average monthly increase of 14,000 jobs in 2023. Over the
month, professional, scientific, and technical services added 42,000 jobs.
Employment in temporary help services changed little over the month (+4,000)
but is down by 408,000 since reaching a peak in March 2022.

In January, employment in health care rose by 70,000, with gains in ambulatory
health care services (+33,000), hospitals (+20,000), and nursing and residential
care facilities (+17,000). Job growth in health care averaged 58,000 per month
in 2023.

Retail trade employment increased by 45,000 in January but has shown little net
growth since early 2023. Over the month, general merchandise retailers added
24,000 jobs, while electronics and appliance retailers lost 3,000 jobs.

Employment in social assistance rose by 30,000 in January, reflecting continued
growth in individual and family services (+22,000). Employment in social
assistance grew by an average of 23,000 per month in 2023.

Employment in manufacturing edged up in January (+23,000), with job gains in
chemical manufacturing (+7,000) and printing and related support activities
(+5,000). Manufacturing experienced little net job growth in 2023.

Government employment continued to trend up in January (+36,000), below the
average monthly gain of 57,000 in 2023. A job gain occurred in federal
government (+11,000), and employment continued to trend up in local government,
excluding education (+19,000).

In January, employment in information continued its upward trend (+15,000).
Employment in motion picture and sound recording industries increased by
12,000, while employment in telecommunications decreased by 3,000. Overall,
employment in the information industry is down by 76,000 since a recent peak
in November 2022.

Employment in the mining, quarrying, and oil and gas extraction industry
declined by 5,000 in January, following little net change in 2023. Over the
month, a job loss in support activities for mining (-7,000) was partially
offset by a job gain in oil and gas extraction (+2,000).

Employment showed little change over the month in other major industries,
including construction, wholesale trade, transportation and warehousing,
financial activities, leisure and hospitality, and other services.

In January, average hourly earnings for all employees on private nonfarm
payrolls rose by 19 cents, or 0.6 percent, to $34.55. Over the past 12 months,
average hourly earnings have increased by 4.5 percent. In January, average
hourly earnings of private-sector production and nonsupervisory employees rose
by 13 cents, or 0.4 percent, to $29.66. (See tables B-3 and B-8.)

The average workweek for all employees on private nonfarm payrolls decreased by
0.2 hour to 34.1 hours in January and is down by 0.5 hour over the year. In
manufacturing, the average workweek was unchanged at 39.8 hours, and overtime
edged down by 0.1 hour to 2.7 hours. The average workweek for production and
nonsupervisory employees on private nonfarm payrolls decreased by 0.2 hour to
33.5 hours. (See tables B-2 and B-7.)

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