Tech Leads US Layoffs with 21,387 Workers Sacked in February
US-based companies cut 77,770 jobs in February, compared to 102,943 in January. Tech companies continued to lead the layoff race, trimming 21,387 jobs last month, which represents 28% of all cuts, according to a report by executive outplacement firm Challenger, Gray & Christmas.
US Employers Cut 77.7K Jobs in February
Tech companies accounted for the most considerable portion of layoffs in February across all sectors, marking a continuation of a trend that emerged in late 2022. The industry cut 21,387 jobs last month, accounting for 28% of all announced layoffs.
The industry laid off 63,216 employees since the year started, up by a whopping 33,705% from the 187 cuts in the same period last year. Challenger data shows that the tech sector accounted for 35% of all layoffs in 2023.
US employers cut 77,770 jobs in February, down 24% from 102,943 in January. Annually, layoffs surged by 410% from 15,245 announced in February 2022.
February 2023 marked the highest number of monthly layoffs since 2009. Since the start of the year, US-based employers announced intentions to slash 180,713 jobs, up 427% from 34,309 layoffs announced in the first months of 2022.
The number of US workers filing for unemployment benefits increased more than 10% last week but is still historically on the lower side. This could suggest that laid-off workers are getting new jobs relatively quickly or might not be in the labor market due to hefty severance packages.
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Fed’s Warnings of Higher Rate Hikes Suggest More Layoffs Are Coming
The report doesn’t come as a massive surprise, given that the tech sector has been leading layoffs since late 2022. Tech giants, including Microsoft, Meta, and Alphabet, have recently announced significant job cuts to reduce spending and protect margins amid economic uncertainty.
“The layoffs that many of these companies are announcing are welcome to investors, sort of right-sizing the cost structure, rationalizing growth is being rewarded in the marketplace.”– said James Tierney, CIO at asset management firm Alliance Bernstein.
Moreover, there is not much that suggests that layoffs will slow down. On Wednesday, the Federal Reserve Chair Jerome Powell reaffirmed the US central bank’s commitment to bringing down inflation through potentially higher and faster interest rate hikes as some sources of inflation remain difficult to tame, like the hot labor market and rising wages.
This could result in further layoffs, particularly in the tech industry. On a more positive note, the job cuts have boosted tech stock prices this year.
Shares of Microsoft, Alphabet, and Amazon are all up year-to-date, rising 5.8%, 5.7%, and 9.4%, respectively. Facebook owner Meta has had a particularly well start to 2023, soaring more than 48% this year after recently beating earnings expectations.
Do you think tech stocks will keep rising if the industry continues slashing jobs at this pace? Let us know in the comments below.