Employers in the United States announced fewer redundancies in July than the previous year, marking the first year-over-year decline in more than a year and fortifying expectations that a robust labor market will assist the economy in avoiding a recession.
According to a report released on Thursday by the employment firm Challenger, Gray & Christmas, U.S. employers announced 23,697 layoffs in July, a 42% decrease from the number of layoffs announced in June and an 8% decrease from July 2022. It was the first annual decline since May 2022, and July had the lowest number of announced cutbacks since August of last year.
The Fed’s aggressive campaign to raise interest rates, which began in March 2022, prompted many economists to predict that it would eventually lead to a recession and widespread job losses, a belief that gained momentum at the start of 2023.
Indeed, the first quarter of the year saw a flurry of termination announcements. There have been more than three times as many announced layoffs this year compared to last: 481,906 announced layoffs in the first seven months of 2023 compared to 159,021 in the same period of 2022.
Nevertheless, this trend appears to be ending. The labor market has consistently outperformed economists’ expectations that the Federal Reserve’s interest rate hikes of 525 basis points would cause the unemployment rate to rise.
Technology Sector Dominates 2023 Layoffs
In 2023, the technology sector accounted for nearly a third of the announced cutbacks, maintaining its position as the industry with the highest rate of redundancies. The majority of employers citing a reason for unemployment in July cited business closure, followed closely by market economic conditions.
The decrease in redundancies last month coincides with other indicators of the labor market’s continued strength. Wednesday, payrolls processor ADP estimated that 324,000 private-sector jobs were added in July, significantly more than the median estimate of 189,000 from a Reuters survey.
The Department of Labor is scheduled to disclose the monthly unemployment rate and payroll changes on Friday. Economists surveyed by Reuters anticipate the addition of 200,000 jobs in July, which is slightly less than the 209,000 jobs added in June, and an unchanged unemployment rate of 3.6%.
Source: Yahoo News