Monthly Layoffs Fall in June, But Nearly 20 Percent Higher Compared to 2023

Job seekers attends a job fair in Sunrise, Fla., on June 26, 2024. (Joe Raedle/Getty Images)

The number of layoffs announced in June declined on a monthly basis due to a seasonal trend, but remained high compared to last year, according to a recent report from outplacement firm Challenger, Gray & Christmas, Inc.

Employers announced 48,786 job cuts in June 2024, down 23.6 percent from May, said a July 3 press release by Challenger.

June 2024 cuts were 19.8 percent higher compared to June 2023; they also represent the worst June since 2020, and the second worst since June 2009.

This is the third time this year that job cuts in a month were higher than the same period a year prior.

Even though June numbers were better than May’s, this was attributed to a seasonal trend, not a better job market.

“June is typically a low month for job cut announcements, as most companies are midyear or at the end of their fiscal years. The months following fiscal year ends tend to have a spike in cuts, as those plans are implemented,” said Andrew Challenger, senior vice president and workplace expert for Challenger, Gray & Christmas, Inc.

“Over the last decade, job cuts have primarily been announced during the first half of the year,” he stated.

Consumer product manufacturing accounted for the largest number of job cuts in June, followed by technology firms, and construction businesses.

Despite the trend in layoff figures, there are still ample jobs available across the country.

Data from the U.S. Bureau of Labor Statistics show that there were 6 million unemployed people in May. Meanwhile, the number of job openings was at 8.1 million, equaling 1.35 job openings for every unemployed American.

Last month, Acting Secretary of Labor Julie Su praised the employment situation of the United States, pointing out that the monthly unemployment rate saw the longest stretch below 4 percent in more than five decades.

“May was yet another good month for the American labor market. The Biden-Harris administration will continue to do all that we can to ensure that workers have opportunity and access to good jobs—the kind where workers aren’t just getting by but getting ahead,” she said.

According to Challenger data, job cut numbers have only declined by a small margin of 5.1 percent in the first half of the year.

The main reason cited for job cuts this year was cost-cutting, followed by market/economic conditions, closure of a plant, and restructuring activities.

Meanwhile, hiring has also slowed down compared to the past years. The Challenger report shows that employers announced plans to hire 19,807 workers in June. This is the second-highest monthly total of this year.

However, the total hiring plans for 2024 is the lowest year-to-date number since 2016.

Labor Market Impact on Interest Rates

In a June 10 report, the U.S. Bank pointed out that despite signs of economic slowdown, the labor market is “still holding up.” This can potentially delay the U.S. Federal Reserve’s decision to bring down interest rates.

The Fed raised interest rates from 0.25 percent in March 2022 to a range of 5.25–5.50 percent in July 2023, and rates have remained at that level until now.

A robust labor market makes it difficult for the Fed to cut rates. If the Fed were to bring down rates, it could encourage companies to hire more people due to the availability of cheaper funds, thereby contributing to inflation. This disincentivizes the agency from reducing interest rates.

The 12-month inflation rate has remained above 3 percent for every single month since June 2023, higher than the Fed’s target of 2 percent.

“The Fed is looking for incremental, month-to-month declines in living costs,” said Rob Haworth, senior investment strategy director at U.S. Bank Wealth Management. “Even though Fed officials don’t indicate an expectation of inflation reaccelerating, they also don’t appear to be convinced that rate cuts should occur just yet.”

Mr. Haworth said the Fed will be closely monitoring average monthly wage growth. The agency “is likely awaiting a sustained, downward trend in wage growth as a positive sign that inflation is easing.”

During the recent policy-making meeting in June, Federal Reserve officials said that the agency could even raise interest rates if inflation continued to remain elevated.

Until there is “greater confidence” that inflation is heading toward the 2 percent target, Fed officials are unwilling to cut rates, according to the minutes from the meeting.

Officials also raised concerns that persistent inflation could result in tighter financial conditions. And if the Fed were to impose more stringent monetary policy in response, it could result in “deteriorating household financial positions, especially for lower-income households,” the minutes stated.