Tech sector bouncing back? US layoffs reduced by 50% in June
Layoffs in the United States experienced a nearly 50% reduction in June compared to the previous month, as job cuts in the technology sector declined.
Amid aggressive interest rate hikes by the Federal Reserve to control inflation and concerns about the United States' economic outlook, data from employment firm Challenger, Gray & Christmas reveals that Corporate America has resorted to significant workforce layoffs, raising apprehensions of a potential recession.
According to Reuters, although job cuts decreased compared to the previous month, layoffs in June were still higher than the corresponding month from the previous year.
The report highlighted that technology companies remained at the forefront of job cut announcements, with a significant increase of 141,516 layoffs in the first half of this year, in stark contrast to approximately 6,000 job cuts reported during the same period last year.
The sector terminated the employment of approximately 5,000 workers in the previous month. Andrew Challenger, the senior vice president at the employment firm, stated that historically, June tends to be the slowest month in terms of job announcements.
He also mentioned the possibility that the anticipated severe job losses resulting from inflation and interest rates might not materialize, especially considering the Federal Reserve's decision to maintain interest rates.
In May, Meta Platforms implemented job cuts as part of their previously announced plan in March to eliminate 10,000 positions. Similarly, Amazon.com had disclosed in March that it would reduce an additional 9,000 roles in response to investor pressure and the company's focus on cost-cutting measures, aligning with the actions taken by other companies in the industry.
Following a series of interest rate increases, the Federal Reserve unanimously decided to maintain its current interest rates during the central bank's June meeting. This decision could potentially halt further layoffs and alleviate concerns among employees.
"Probably we have already seen the tech sector shed the bulk of its 'at risk' workers, and as such I would expect further Fed tightening to now impact more heavily on other sectors of the US economy," said Stuart Cole, chief macro economist at Equiti Capital, reported Reuters.
