While retail companies are typically ramping up hiring for the holiday season this time of year, job cuts in the sector are on the rise, another sign of a slowing labor market.
U.S.-based employers announced nearly, 30,000 job cuts last month, a 68% increase from the year prior and 46% increase from the previous month, according to a Thursday report from outplacement firm Challenger, Gray & Christmas, Inc.
Employers announced plans to hire 380,014 workers, the lowest September total since 2011. And while total job cuts in the third quarter were down 1.6% from the prior quarter, September was the fifth month this year where cuts surpassed the corresponding month in 2021.
“Some cracks are beginning to appear in the labor market. Hiring is slowing and downsizing events are beginning to occur,” Andrew Challenger, senior vice president of Challenger, Gray & Christmas, said in the report.
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Which sectors are cutting jobs?
So far this year, the top five industries with job cuts include:
- Automotive: 28,922 job cuts, up 194% from the year prior.
- Health care/products: 23,850, up 26%.
- Technology: 18,620, up 86%.
- Retail: 18,213, up 11%.
- Services: 15,999, down 29%.
Why are job cuts rising in 2022?
Challenger said the cooling housing market at the Fed’s rate hikes have led to job cuts among mortgage staff at banks and lenders, and recession concerns have companies across sectors reassessing their staffing needs.
And a low number of hiring announcements in the retail sector suggest companies are waiting to see whether customers indulge in the holiday shopping season before taking on more staff.
According to the Challenger, Gray & Christmas report, “closing” was listed as the number one reason for job cuts in September, followed by “cost-cutting,” “market conditions” and “demand downturn,” as well as “no reason provided.”
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Unemployment benefits applications are up
Also Thursday, the Department of Labor released a report showing more people are applying for unemployment benefits.
The number of people who applied for benefits last week jumped 15% to a five-week high of 219,000, which could be a sign of more layoffs.
Meanwhile, the number of open jobs is decreasing. Job openings fell to 10.1 million, or 6.2% rate of job openings, at the end of August.
The Bureau of Labor Statistics is set to release the jobs report for September on Friday. Economists expect to see 250,000 jobs added, the lowest monthly gain since December 2020. The unemployment rate is expected to remain steady, per Refinitiv estimates.
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