US job cut announcements halve in June, Challenger says
By Alexander Bueso
Date: Thursday 06 Jul 2023
(Sharecast News) - Layoff announcements in the States fell sharply last month with job cuts slowing especially sharply among automotive, entertainment and technology companies, the results of a closely followed survey showed.
According to Challenger, Gray, & Christmas, US-based firms unveiled 40,709 new job cuts in June.
Last month's tally marked a 49% reduction versus the reading for the previous month and prompted the global outplacement specialist to muse out loud whether the so-called 'Tech Purge' had now run its course.
"The drop in cuts is not unusual for the summer months. In fact, June is historically the slowest month on average for announcements.
"It is also possible that the deep job losses predicted due to inflation and interest rates will not come to pass, particularly as the Fed holds rates," said Andrew Challenger, senior vice-president at the staffing firm.
That was despite the 458,209 layoffs which had been announced year-to-date, which was 244% more than those seen during the first half of the year before.
Aside from 2020, it was also the most redundancies announced in the first half of the calendar year since 2009, when 896,675 job cuts were unveiled.
In technology, job cut announcements had soared by 2,353% versus 2022 to reach 141,516, the second worst showing since 2001, when companies in the sector said they would cut 168,395 employees.
Retail companies had announced the second-most job cuts thus far in 2023 with the number rising by 718% to 48,212, followed by a 268% jump among financial firms to 39,768.
Commenting on the latest data, Ian Shepherdson at Pantheon Macroeconomics said that he was keeping an "open mind" despite the slowdown in layoff announcements being atypical for what is usually seen 16 months after the fed begins raising rates aggressively.
"[...] So many unlikely things have happened in the economy in recent years that we have to keep an open mind; it is possible, at least, that businesses' balance sheets are in so much better shape than usual by the time the Fed is tightening that they are able to ride out the impact of much more expensive credit."
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