Layoffs jump to highest for any February since 2009, report says

Powell says rate cuts are likely coming in 2024

Federal Reserve Chair Jerome Powell on Wednesday said policymakers are on track to cut interest rates sometime in 2024, but are not ready to do so until they are confident inflation is tamed.

The number of layoffs by U.S. employers surged in February, a sign of a potentially worsening labor market amid ongoing inflation and high interest rates.

A new report published Thursday by U.S. outplacement firm Challenger, Gray & Christmas found that companies planned 84,638 job cuts in February, a 3% increase from the previous month and a 9% jump from the same time last year.

It marked the highest layoff total for the month of February in data going back to 2009, according to the firm.

"As we navigate the start of 2024, we're witnessing a persistent wave of layoffs. Businesses are aggressively slashing costs and embracing technological innovations, actions that are significantly reshaping staffing needs," Andy Challenger, senior vice president of Challenger, Gray & Christmas, said in a statement.

Which industries are facing layoffs

FILE - Close up detail of a business person working at a desk with a smartphone and laptop computer, taken on Jan. 31, 2019. (Photo by Neil Godwin/Future via Getty Images)

Technology companies faced the most job losses in February, with the industry shedding 12,412 employees. In total, the tech sector has lost 28,218 jobs since the start of 2024.

Financial firms followed with 26,856 layoffs since the start of the new year, a 54% increase from the same period last year.

Industrial goods manufacturing companies have also seen a sharp jump in layoffs so far in 2024, cutting 7,806 positions — a 1,754% increase from last year, according to the report.

Energy companies have also announced 1,059% more cuts than during the same period in 2023.

Another source of layoffs in February was education, which trimmed 6,336 positions last month, a significant increase from the 607 layoffs announced in January and February 2023.

The causes of layoffs

The top reason cited for job cuts last month was restructuring, the report said.

Companies blamed stores closing and economic and market conditions for the layoffs, as well.

Companies explicitly mentioned "artificial intelligence" as the reason for 383 job cuts so far this year. More often, they cited updating or incorporating new technology, accounting for 15,225 cuts through February. That was a significant increase from the 15,849 total job cuts attributed to technological updates since 2007, the firm said.

"In light of the backlash some companies have faced for directly attributing job cuts to artificial intelligence, they appear to be framing this shift as a ‘technological update’ rather than an outright substitution of human roles with AI," Challenger said. "In truth, companies are also implementing robotics and automation in addition to AI. It's worth noting that last year alone, AI was directly cited in 4,247 job reductions, suggesting a growing impact on companies’ workforces."

The labor market has remained historically tight over the past year, defying economists' expectations for a slowdown. Although economists say it is beginning to normalize after last year's blistering pace, it is nowhere near breaking, FOX Business reported.

The report was released ahead of the more closely-watched February jobs report from the Labor Department, which showed that U.S. employers added a surprisingly robust 275,000 jobs in February.

February’s job growth marked an increase from a revised gain of 229,000 jobs in January. At the same time, the unemployment rate ticked up two-tenths of a point in February to a still-low 3.9% – the highest rate in two years.

This story was reported from Cincinnati. FOX Business and the Associated Press contributed.