Eyes are on the US jobs market as the Fed tries to keep unemployment from rising above 4.4%. Some highlights of the Challenger report:
- September job cuts up 53% y/y, but down slightly from August
- Layoffs 69% above pre-COVID average in September, improving from 81% in August
- Regional shifts: West cools, East surges in job cuts
- Tech sector leads layoffs; AI cited for 5,600 cuts in September
- Hiring plans at lowest level since 2011, seasonal hiring down significantly
- Net hiring pace remains negative, suggesting continued soft labor market
“We’re at an inflection point now, where the labor market could stall or tighten. It will take a few months for the drop in interest rates to impact employer costs, as well as consumer savings accounts. Consumer spending is projected to increase, which may lead to more demand for workers in consumer-facing sectors.
“Layoff announcements have risen over last year, and job openings are flat. Seasonal employers seem optimistic about the holiday shopping season. That said, many of those who found themselves laid off this year from high-wage, high-skill roles, will not likely fill seasonal positions,” said Andrew Challenger, Senior Vice President of Challenger, Gray & Christmas, Inc.
Parker Ross from Arch Capital tees up a nice chart from today's report by combining layoffs with hiring plans and showing how it's below the pre-covid period.
Ross notes -- like some at the Fed -- that the jobs market appears to be loosing as a result of less hiring rather than layoffs, which is why initial jobless claims remain low.
"In September, hiring plans were announced for 404k roles, which sounds like a lot, but was actually 89k below the pre-COVID norm for the month and down from 590k announced a year ago," he writes.
