Tech companies lead surge in planned layoffs, up nearly 5-fold in 2023

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The number of layoffs has surged by nearly five times this year, with the tech industry being the hardest hit, according to a report by Challenger, Gray & Christmas. The outplacement firm reported that 89,703 layoffs were planned in March, up 15% from February, and an increase of 396% compared to the same period last year. The tech industry announced 102,391 job cuts, an increase of 38,487% from a year ago, making up 38% of all staff reductions. Financial companies announced the second-highest rate of job cuts, with 30,635 layoffs. The main reason cited for job cuts was market and economic conditions, followed by cost-cutting.

Andrew Challenger, Senior Vice President of Challenger, Gray & Christmas, warned that the large-scale layoffs seen in March will likely continue. Companies are approaching 2023 with caution, despite the economy creating jobs, due to the ongoing rate hikes and cost-cutting measures. On a year-to-date basis, planned additions are at the lowest quarterly total since 2016. The report comes ahead of the US Labor Department’s nonfarm payroll count for March, with economists surveyed by Dow Jones expecting job growth of 238,000.

The Federal Reserve has been targeting the tight labor market as it seeks to soften inflation rates that have been running near 40-year highs. The Fed has increased its benchmark borrowing rate by 4.75 percentage points in the past year or so. Markets are currently expecting the Fed to start cutting rates later this year, according to the CME Group’s FedWatch tool. The number of available job positions fell below 10 million for the first time since May 2021, indicating some loosening in the employment market.

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