WASHINGTON (AP) — Blockbuster Employment growth over the past few months coincided with high-profile layoff announcements by a number of large companies.
So how can both occur at the same time? It's not as contradictory as it might seem. Recent layoffs have been largely concentrated in just a few sectors, including technology, finance and media.
Compared to the U.S. workforce of 160 million people, layoffs have so far been dwarfed by consistently strong hiring, with an average of 248,000 jobs added per month over the past six months. The unemployment rate remains at just 3.7%, barely above a 50-year low.
Many companies are currently cutting staff. overemployed during the pandemicThey believed that the trends emerging at the time, especially the proliferation of online shopping, would continue rapidly. As the economy normalized, many of these companies realized they no longer needed as many employees and responded by cutting staff.
In January, U.S. businesses and other employers added a massive 353,000 jobs, the largest monthly increase in a year. The government also revised upward its employment growth forecast for November and December by a combined 126,000 jobs. The data provided compelling evidence that most businesses, large and small, have enough confidence in the economy to continue hiring.
Some of the companies that have announced layoffs are among the most well-known. Google, Amazon, eBay, UPS, Spotify and Facebook's parent company Meta. They weren't the only ones. Outplacement giant Challenger, Gray & Christmas reported this week that companies announced 82,000 layoffs in January, the second-highest number of layoffs in January since 2009.
Here's why these seemingly disparate trends align.
Job increases and job cuts are occurring across a variety of industries.
Across most industries, companies have continued to add employees over the past three months. For example, manufacturers added 56,000 units in November, December, and January combined. During this time, the restaurant, hotel and entertainment company made a profit of nearly 60,000 yen. The number of healthcare providers such as hospitals, clinics and dentists increased by 300,000.
They are not all low-wage jobs. The sector, which the government refers to as professional and business services, is a vast category that includes accountants, engineers, lawyers and their support staff, with 120,000 more jobs than in October. Federal, state and local governments, which restored employment to pre-pandemic levels in September, also added nearly 120,000 jobs during the period.
In contrast, layoffs were more intensive. The Labor Department doesn't specifically track technology jobs, but Friday's jobs report pointed to signs of the industry's struggles. The unemployment rate for media and technology workers in what the government calls the “information” sector jumped to 5.5%. In January, it rose from 3.9% a year ago. This is nearly 2 percentage points higher than the national unemployment rate.
Layoffs do not mean economic downturn
Even more confusing is why companies would cut workers if the economy is growing and consumers continue to spend.Last week, the government estimated that the economy had expanded healthily. October-December period: annual rate of 3.3% Following strong growth of 4.9% in the previous quarter.
Companies tend to reduce headcount for all sorts of reasons, sometimes to reflect changes in business strategy or to maintain or improve profit margins. Many tech companies that continued to hire heavily in 2022 as the economy accelerated from the pandemic recession misjudged the long-term demand for their products and services.
In a survey on job cuts, Challenger, Gray & Christmas said “restructuring” was the main reason companies cited for laying off employees last month. A year ago, it was “economic situation”, but Renaissance Macro Economist This means that businesses were previously more concerned about economic conditions.
Todd McKinnon, CEO of software company Okta, announced in a message that the company will cut approximately 400 jobs heading into 2023 “based on our growth plan based on the demand experienced in the previous year.” .
“This has led to overemployment in line with today's macroeconomic realities,” he writes.
Layoffs spread over time
High-profile layoffs typically include a number of layoffs that are not immediately implemented. For example, shipping and logistics provider UPS announced earlier this week: 12,000 jobs will be cut this year. But he said these cuts would be made over several months. As such, they were not included in the January jobs report released on Friday, as the layoffs had not yet taken place.
It's a really big economy.
This does not necessarily mean that government employment statistics will worsen over time as cuts by UPS and others are implemented. Retrenchments can be extremely painful and disruptive to those who suffer from them. But layoffs, even on the scale of UPS's, won't actually move the vast U.S. economy. Approximately 5 million people leave or are laid off each month; government data showsMeanwhile, more than 5 million people are employed.
Many other data confirm that the job market as a whole is fundamentally healthy.number of people Seeking unemployment benefitshas long been seen as a guideline for layoffs, but remains at a very low level.and non-governmental data, including employment tracked by governments. Payroll provider ADPindicates that private companies continue to add employees.