By Bryan Jung
The rate of job cuts in the United States soared 127 percent in November, amid a wave of layoffs in the tech industry.
The American employers announced 76,835 cuts last month, a 127 percent increase from the 33,843 cuts in October, according to a report by Challenger, Gray & Christmas.
Last month saw a 417 percent increase over the 14,875 cuts announced in November of last year, and is the sixth time for 2022 that cuts were higher than in the corresponding month a year earlier, according to Challenger.
Job Losses Spike in November, as Fears of Recession Loom
Employers are now freezing hiring or slowing cutting positions due to the fear that a recession is around the corner, as the once strong labor market begins to take a hit.
Nearly 100 large companies, ranging from retail to banks and crypto exchanges, have carried out massive series of job cuts since May, as interest rate hikes by the Federal Reserve began to shake the market, reported Forbes.
Companies have so far announced plans to cut 320,173 jobs through November, which is a 6 percent increase from the 302,918 cuts announced during the same period in 2021.
Total job cuts for 2022 have for the first time exceeded the total number of losses that were announced in 2021.
However, the year-to-date total number of layoffs is still the second-lowest on record since Challenger began tracking job cuts in 1993, with the lowest occurring in the same month last year.
“When we’re looking at layoffs across the board, while we have seen an uptick from the historic low layoffs we’ve been in at the last two years, we’re not seeing huge mass layoff activity,” Andrew Challenger, senior vice president at Challenger, Gray & Christmas, told CNBC.
Tech Sector Sheds Thousands of Employees, as Industry Faces Market Losses
The technology sector, which led the majority of losses last month, announced 52,771 cuts in November, for a total of 80,978 job cuts so far this year, for the highest monthly total since Challenger started to track industry data in 2000.
This is the worse year-to-date loss for the tech sector in 20 years, during the end of the dot.com boom, as tech stocks took a major hit this year.
Comparatively, the year 2002 saw 128,563 tech industry jobs losses through November of that year, with 131,294 cuts in total.
Cuts in the tech sector for 2022 are brutal enough, and is higher by 535 percent above the 12,761 cuts announced through the same period last year.
About 11,000 Meta employees, for example, were laid off earlier this month, the largest number of terminations this fall, reported Forbes.
This was followed by a similar number of cuts at Amazon, which will reportedly affect as many as 10,000 employees, The New York Times reported.
Cisco announced two weeks ago that it would cut 4,100 employees, or 5 percent of its staff, while new Twitter CEO Elon Musk had in mind to fire 50 percent of the company’s staff, affecting 3,750 employees.
Hewlett Packard, too, last week announced that it would cut between 4,000 and 6,000 employees by the end of 2025.
Other Industries Take Losses
Meanwhile, the financial tech sector saw a whopping 1,272 percent increase in layoffs, or 8,125 jobs, over the 592 lost during the same period in 2021.
“The tech sector has announced the most job cuts this year by far. While other industries are cutting jobs at a slower pace, hiring appears to have slowed as well,” said Challenger.
The financial sector saw 17,571 cuts so far, up 105 percent from the 8,568 announced through November of last year.
The automotive industry witnessed the second-largest number of job cuts this year, at 30,669, a 198 percent increase from the 10,277 cuts during the same period last year.
The leisure, retail, and transportation sectors have all announced many tens of thousands of cuts over the last several months, the worse since the pandemic hit in 2020.
Challenger reported that the last time a single industry cut that many workers in a single month was in July 2015, when the federal government cut 57,531, primarily when the U.S. Army announced 40,000 in troop-number reductions over the next three years.
Due to the flagging housing sector, the real estate industry saw 7,919 job losses this year, a 187 percent increase from the 2,762 announced during the same period in 2021.
Employers in November announced plans to hire 30,203 new workers, bringing the year-to-date total of new hires to 1,430,671, a 14 percent decrease from the 1,662,433 announced in the same period last year.
The Fed Indicates an Ease in Interest Rate Policy
Meanwhile, many economists are predicting that a recession will hit sometime in 2023, even as inflation rates have slowed over the last couple of months.
Federal Reserve Chairman Jerome Powell, at a speech at the Brookings Institution on Nov. 30, said the Fed will probably slow its pace of interest rate hikes in December.
Powell said that “despite some promising developments, we have a long way to go in restoring price stability.”
This comes after the Fed indicated last week that it would start to ease its aggressive interest-rate hike policy, as it attempts ease consumer demand to reduce inflation.