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02 февраля 2024 07:20

Layoffs still at historic low despite recent headlines — but there's a catch

The headlines have been filed with layoffs aplenty. The media industry has felt the brunt of it as The Messenger's sudden shutdown on Wednesday added to a slew of layoffs since the beginning of the year that include the Los Angeles Times, Business Insider, and TechCrunch. Other industries have also had to deal with cutting their staff, including companies like Microsoft — which cut about 1,900 workers in Activision Blizzard and Xbox a week ago — and PayPal, which announced on Jan. 31 that it would be cutting about 9% of its staff. This uptick may explain the boost in claims for unemployment benefits which was at 224,000 for the week ending on Jan. 27, the highest its been in 11 weeks, and 9,000 more than the prior week, according to a report by the Associated Press. The AP also reported that the four-week rolling average for unemployment benefit claims is up over 5,000.Related: Jobs report preview: Fed rate cuts could rely on 'game changing' trend But a report from Bloomberg last week suggested that applicants for unemployment benefits may not be a proper barometer to measure the labor market largely because many job seekers may not qualify for benefits and therefore don't apply. However, the Bloomberg report came given historically low unemployment claims, whereas new data suggests that these rates are climbing. Even if it is seen as sign of a growing number of layoffs in the country, the caveat is that December layoffs were still recorded as some of the lowest in recent memory. The January data is expected by Friday, Feb. 2. Rubeela Farooqi, chief US economist at High Frequency Economics, told Bloomberg that despite what seems to be a barrage of layoffs, that isn't the case in the big picture — and there's a holding pattern that's positive for the general employee. “The data continue to show that layoffs are not mounting,” Farooqi told Bloomberg. "For now, an adjustment in labor market conditions is coming from a slowing in hiring rather than a surge in firings, which is welcome news."Related: Fed pushes back on spring cuts but holds rates steady at 5.25% to 5.5% Daniel Zhao, and economist and data scientist at Glassdoor, posted his thoughts on LinkedIn two days ago. "This seems to suggest a freeze in the job market where employers were hesitant to lay off workers but unwilling to commit to new hiring amid recession fears," Zhao wrote. "And that lower hiring demand means employees are sitting tight rather than looking for greener pastures." He also said that despite the headlines, he thinks the record low levels of layoffs will continue. "Note the scale here makes it unlikely recent layoffs in the headlines will significantly budge this figure when the January data comes out next month," Zhao wrote.Related: Veteran fund manager picks favorite stocks for 2024
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