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A report on Thursday showed U.S. layoffs hit the highest level in more than two years in January, as technology companies shed jobs at the second-fastest pace on record in response to a looming recession.

The layoffs affected 1,02,943 workers, more than triple from December and more than fivefold from a year ago, according to a report by employment firm Challenger, Gray & Christmas.

Companies including Microsoft , and Goldman Sachs Group Inc. cut thousands of jobs last month to weather a period of sluggish demand as high inflation and rising interest rates curtailed consumer and business spending.

“We’re on the other side of the pandemic-era hiring frenzy right now,” said Andrew Challenger, a labor expert and senior vice president at the employment firm. “Companies are bracing for a slowdown, layoffs and slower hiring.”

Efforts to correct pandemic excesses have been most visible in the tech sector, which shed 41,829 jobs last month, the most of any industry.

The retailer, second only to technology, cut 13, jobs in January, compared with almost none a year earlier. Meanwhile, financial firms cut 10,603 jobs last month, up from 696 a year earlier.

With the Federal Reserve expected to continue raising interest rates to curb inflation, which remains elevated after several rounds of rate hikes, analysts said U.S. companies could lay off more workers.

“For companies that have increased headcount over the past few years, they may shrink their workforce as the economy heads toward tougher times,” said OANDA analyst Edward Moya.

© Thomson Reuters 2023

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By Rebecca French

Rebecca French writes books about Technology and smartwatches. Her books have received starred reviews in Technology Shout, Publishers Weekly, Library Journal, and Booklist. She is a New York Times and a USA Today Bestseller...