Job cuts announced by U.S.-based companies jumped an unhealthy 46% between April and May to 58,577. It is another sign the job market is softening, and with that comes the threat of a sharp economic slowdown.
Job cuts in April totaled 40,023. The figure was even worse compared to May of last year, when job cuts were 31,517. On this basis, May job cuts rose 86%. The numbers are based on data from Challenger, Gray & Christmas.
The tech sector has driven much of the economy since the Great Recession. That may be slowing, based on the Challenger, Gray numbers. The largest number of job cuts in any sector in May was from tech. Those cuts hit 12,635, which brings the year-to-date total to 18,568, or 342% above the 4,205 announced cuts through this point last year.
Andrew Challenger, vice president of Challenger, Gray & Christmas, commented:
The Tech sector announced the highest number of job cuts last month. Large Tech firms are finding they need to move workers through the pipeline in order to become more agile. In fact, we’ve seen a number of Tech and Telecom companies offering buyouts to older workers over the last year.
Retail continues to suffer significantly as the brick-and mortar-part of the sector falters. Retailers have cut more jobs than in any other sector, with 50,243 cuts. Of these, 2,167 were announced in May. However, retail cuts are down 28% compared with last year, when 69,316 were announced. The list of retailers closing the most stores has gotten longer.
The auto industry has suffered this year as well. Car companies have started to prepare for lower sales against overcapacity at factories. Companies in the car industry have cut 21,446 jobs, which is 211% higher than in the first five months of last year. Much of this gain was from the 7,000 job cuts announced by Ford. Car sales are directly tied to the economic activity of the overall economy, so these numbers may get worse.
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For the time being, it appears that overall cuts in 2019 will surpass those in 2018. The federal jobs report for May will be released late this week and may confirm that national employment gains are softening. Since tech jobs are among the best jobs in America, as well as some of the highest paying, the industry’s health is critical for the balance of the year.