Layoff announcements by U.S. companies plummeted in February, while hiring intentions rebounded, new employment data released on March 5 show.
Planned job cuts totaled 48,307 last month, down 55 percent from January’s reading of 108,435, according to global outplacement firm Challenger, Gray and Christmas. This is also down 72 percent from the same time a year ago, when businesses announced more than 172,000 cuts.
The January–February total stands at 156,742, the lowest two-month tally since 2022.
Andy Challenger, the firm’s chief revenue officer, called it a “nice reprieve” after the sharp jump to kick off the year. But this does not mean the labor market is out of the woods.
The national labor market has seen scores of major companies—Amazon, Block, Meta Platforms, and UPS, for example—announcing layoffs. Corporations have attributed these reductions to a broad array of reasons, from artificial intelligence (AI) to economic uncertainty.
“With U.S. involvement in a growing war in Iran, the end of Q1 may bring more layoff plans as companies tighten belts amid uncertainty and higher costs,” Challenger said in a news release.
Last month’s reduction in headcount in the technology sector exceeded 11,000, bringing the two-month total to 33,330.
While AI is the major driver right now, other factors are adding pressure to the sector, including the global regulatory environment, a slowdown in digital advertising, and concerns about the economy.
Education posted the second-highest number of job cuts in February, with 5,417 layoffs—a 96 percent increase from the same period a year ago.
“School districts tend to approve budgets and headcount in February. With declining enrollment, particularly in major cities, federal funding cuts and rising costs, schools are cutting more workers than last year,” said Challenger.
Health care, industrial manufacturing, and transportation were other notable industries to register job cuts.
Despite employment conditions cooling off sharply over the past several months, mass layoffs have not been ubiquitous, creating a “low-fire, low-hire” environment. The layoff rate stood at 1.1 percent in December, below the pre-pandemic level of 1.3 percent.
Applications for unemployment benefits have also hovered around historically low levels. Initial jobless claims were unchanged at a lower-than-expected 213,000 for the week ending Feb. 28, according to the Department of Labor.
Hiring Intentions
Challenger reported a 140 percent monthly increase in hiring plans, reaching almost 13,000. Still, this is down 63 percent from a year ago.
The employment indexes of the Institute for Supply Management’s Manufacturing and Services Purchasing Managers’ Indexes jumped to their highest levels in a year last month.
The Bureau of Labor Statistics’ February jobs report, scheduled for release on March 6, should provide a more comprehensive summary of recent hiring trends. Early estimates suggest the U.S. economy added approximately 60,000 new jobs and the unemployment rate held steady at 4.3 percent.
January’s nonfarm payrolls report showed the country created 130,000 new jobs.
A key factor for the labor market is the lack of “organic demand” for workers right now, says Minneapolis Federal Reserve President Neel Kashkari.
“Yes, a 4.3 percent unemployment rate is still a good unemployment rate, but I do see evidence that the labor market is not demanding a lot more workers right now,” Kashkari said at a March 3 Bloomberg event.
Employment levels have been “generally stable” over the past several weeks, according to the Fed’s latest Beige Book—a summary of economic conditions across the central bank’s 12 districts. Seven of the 12 districts reported no change in hiring.
“Contacts in several Districts cited rising nonlabor input costs, softer demand, or uncertainty about overall economic conditions as reasons for flat or lower employment levels,” the report stated.
Investors widely anticipate that monetary policymakers will leave interest rates on hold when they convene their two-day Federal Open Market Committee meeting later this month.
But the February employment data could persuade one key official on whether to keep supporting lower interest rates or join his colleagues in pressing the pause button.
Fed Governor Christopher Waller, who has repeatedly advocated for rate cuts since last spring, says that if the job numbers keep improving, it could support maintaining the benchmark federal funds rate in a range of 3.5 percent to 3.75 percent. However, if recent gains are wiped out, he would still support a lower policy rate.
“I rate these two possible outcomes as close to a coin flip,” Waller said in a Feb. 23 speech. “There is no dismissing the weakness of job creation in 2025, and, for the reasons I have noted, it won’t be a huge surprise if the strong January report turns out to be noise and not signal.”