US hiring slows as employers add 315,000 jobs
America’s employers slowed their hiring in August in the face of rising interest rates, high inflation and sluggish consumer spending but still added 315,000 jobs. (Sept. 2)
AP
A recent report found job cuts are on the rise among U.S. companies, the latest indicator that the country’s strong labor market is cooling.
Overall, U.S.-based employers announced nearly 30,000 job cuts last month, a 68% increase from a year earlier and a 46% increase from the previous month, according to a report Thursday from Challenger.
Employers announced plans to hire 380,014 workers, the lowest September total since 2011. And though total job cuts in the third quarter were down 1.6% from the second quarter, September was the fifth month this year when reductions surpassed the corresponding month in 2021.
“Some cracks are beginning to appear in the labor market. Hiring is slowing, and downsizing events are beginning to occur,” Andrew Challenger, senior vice president of Challenger, Gray & Christmas, said in the report.
While retail companies usually spend this time of year ramping up staffing for the holiday season, the report from outplacement firm Challenger, Gray & Christmas. found year-to-date hiring plans in the sector were down 37% compared with the year prior.
“What that basically tells you, very clearly, is that the sellers are not expecting a very bountiful Christmas season,” said Joelle Saad-Lessler, associate industry professor at Stevens Institute of Technology’s school of business.
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Which sectors are cutting jobs?
The top five industries in job cuts are:
- Automotive: 28,922 job cuts this year, up 194% from the year before.
- Health care/products: 23,850, up 26%.
- Technology: 18,620, up 86%.
- Retail: 18,213, up 11%.
- Services: 15,999, down 29%.
Cuts throughout the retail sector related to holiday hiring are also highlighted in the report, as the both consumers and retailers brace for an uncertain winter following a summer of whipsawing data and record high inflation.
Why are jobs being eliminated?
According to the Challenger report, “closing” was listed as the No. 1 reason for job cuts in September, followed by “cost-cutting,” “market conditions” and “demand downturn,” as well as “no reason provided.”
Challenger said the cooling housing market and the Federal Reserve’s interest rate increases have led to job reductions among mortgage staff at banks and lenders, and recession concerns have companies across sectors reassessing their staffing.
The overall labor market is still solid
Despite the job cuts, the overall labor market remains strong, according to Wells Fargo senior economist Sarah House.
“You still have historically high demand for workers,” she told USA TODAY. “But I think when we look at the direction of the market, it has softened a little bit in recent months. So still strong in an absolute sense but cooling since the spring, and we think will cool further in the months ahead.”
While news of layoffs at companies like Peloton are making headlines, House said workers should “not be terribly concerned” about losing their jobs.
“Sure, we’re seeing some layoffs in certain sectors,” she said. But when “we look at the composition of the companies announcing job layoffs right now, they’re not fully indicative of widespread job cuts across industries.”
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Unemployment benefits applications are up
Also Thursday, the Department of Labor released a report showing more people are applying for unemployment benefits.
The number of people who applied for benefits last week jumped 15% to a five-week high of 219,000, which could be a sign of more layoffs.
Meanwhile, the number of open jobs is decreasing. Job openings fell to 10.1 million, or 6.2% rate of job openings, at the end of August.
The Bureau of Labor Statistics is set to release the jobs report for September on Friday. Economists expect to see 250,000 jobs added, the lowest monthly gain since December 2020. The unemployment rate is expected to remain steady, according to estimates from Refinitiv, a global provider of financial market data and infrastructure.
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