In September, U.S. employers revealed significant job cuts, with a report indicating that employment plans have plummeted to their lowest point since 2009, underscoring a growing uncertainty in the job market.
Last month, companies reported a total of 54,064 job cuts, which, according to outplacement firm Challenger, Gray & Christmas, marked the only instance of cuts occurring in the same month three times this year.
So far in 2023, total job cuts have reached 946,426—the highest number since 2020, when over 20 million job losses were documented.
Grayger, a senior vice president and labor expert at Challenger, noted that such high levels of job cuts are reminiscent of recession periods or the initial phases of automation that resulted in significant manufacturing and tech job losses, as seen in 2005 and 2006.
On the hiring front, things don’t look much better. Companies have indicated plans to create around 205,000 jobs in the first nine months, the lowest figure since 2009, representing a 58% drop compared to the same timeframe in 2024.
This data gives rise to what analysts label a “no employment, no voice” labor market, where layoffs, though relatively few, add to the overall uncertainty.
The Challenger report comes amid concerns over an impending federal government shutdown, which may disrupt the release of official labor statistics. The Bureau of Labor Statistics’ report for September, scheduled for release on Friday, could face delays.
While government statistics are often considered the gold standard for labor market data, economists and policymakers currently find themselves relying on alternative sources, navigating through a lack of clarity on the economy.
Challenger commented on the stagnant labor market, rising costs, and new transformative technologies. They expressed a cautious outlook for the job market in the fourth quarter, suggesting that various factors could complicate hiring practices.
Additionally, reports from the payroll company ADP indicated that the U.S. lost 32,000 private sector jobs in September. Alarmingly, the previous month’s figures were adjusted from an increase of 54,000 to a loss of 3,000.
Nera Richardson, ADP’s chief economist, noted that this latest data reflects a general wariness among U.S. employers regarding hiring.
Economists often view ADP reports with skepticism due to potential discrepancies with government figures. However, there’s a strong belief that weak private employment data will likely influence decisions from the Federal Reserve regarding interest rates, as suggested by the CME FedWatch tool.
This month, the Fed lowered its interest rate for the first time in 2023, aiming to bolster the labor market, despite inflation concerns that exceed the 2% target.
The Consumer Price Index for September is set to be released on October 15, though its timing may also hinge on the resolution of the government shutdown.
