Announced job cuts totaled 75,891 in August, 193% higher than July

Layoffs surged in August, reaching their highest total for the month in 15 years, while year-to-date hiring dropped to a historic low, according to a report from outplacement firm Challenger, Gray & Christmas released on Thursday.

For August, announced job cuts totaled 75,891, marking a 193% increase from July. Although this figure was only 1% higher than August 2023, it represents the highest number of layoffs for the month since 2009, a period when the economy was still recovering from the global financial crisis.

In contrast, hiring was markedly low, with companies reporting the addition of just 6,101 new positions. This figure is nearly 2,500 higher than in July but down over 21% from August 2023. The year-to-date total for hiring, at nearly 80,000, is the lowest on record since 2005.

“August’s spike in job cuts reflects increasing economic uncertainty and changing market dynamics,” said Andrew Challenger, senior vice president at the firm. “Companies are contending with various pressures, including rising operational costs and concerns about a potential economic slowdown, leading them to make difficult decisions regarding their workforce.”

The report raises concerns about a weakening labor market, despite the U.S. economy adding 1.4 million nonfarm payrolls this year. Payroll processing firm ADP reported on Wednesday that private companies added only 99,000 jobs in August, the smallest increase since January 2021.

Markets are anticipating that a softening job market could prompt the Federal Reserve to lower interest rates later this month, even though inflation remains above the central bank’s 2% target.

However, the Challenger layoffs data does not completely align with government reports, which indicate that initial claims for unemployment benefits have been slightly elevated recently but do not suggest a major escalation. For the week ending August 31, jobless claims were 227,000, a slight decrease from the previous week.

The report highlighted that the largest increase in planned layoffs came from the technology sector, with companies announcing 41,829 cuts, the highest number in 20 months.