Layoff announcements exploded during October as companies invested in artificial intelligence. This is a deeply concerning sign of trouble ahead for the major labor market workers as Job cuts for this October totaled 153,074, which is a 183% surge from September and 175% higher than the previous month from a year ago. This is the highest level for every October since 2003 and the worst year for announced layoffs since 2009. Reports show glimpses into the labor market during the time when the government suspended the data gathering and releases during the shutdown in Washington, D.C.
The company Challenger releases monthly reports on how many layoffs employers are planning to proceed with. Those numbers jump around from month to month. Their latest report shows that the number of layoffs are rising, but their data isn’t showing in the weekly reports of people filing for their unemployment benefits. This means either nobody’s being laid off yet or they never applied for unemployment benefits. Another source of data from ADP reported that October had a net job growth of 42,000, which reversed two consecutive months of losses in the private sector.
Federal Reserve officials have expressed their concerns about the softening of the labor market. Central banks have lowered their benchmark interest rate twice since September, and it is expected to lower another quarter percentage point reduction in December as the policymakers look to prevent any more serious problems.
The challengers have reports of the highest level of layoffs coming from the technology sector due to AI integration. Companies in that specific sector have announced that 33,281 cuts have been made, which is six times the level in September.
In total, companies have announced that about 1.1 million cuts have been made this year. A total of 65% increase from the previous year and the highest level since the COVID-19 pandemic in 2020. October has seen its highest total cuts from any month in the fourth quarter since 2008.
