The February Challenger report on job-cut announcements shows little change from January, up only 2.8 percent to 84,638 from 82,307 in the prior month, but up 8.8 percent from 77,770 a year ago. The pick up in job cuts is fairly typical of this time of year as businesses associated with cold weather activity start to pare payrolls before the warmer weather.

In February, the largest share of job cuts announced by industry were in transportation (13,573 jobs or 16.0 percent of the total), technology (12,412 or 14.7 percent), and services (8,686 or 10.3 percent). Together the three sectors accounted for over 40 percent of all planned layoffs. Layoffs in the tech sector remain the leading source of planned job cuts, but the pace has slowed considerably. For the first two months of 2024 there have been 28,218 layoffs in tech compared to 63,216 in the same period in 2023.

Reasons cited for cutting jobs in February were led by cost-cutting (14,031 or 16.6 percent of the total), no reason (13,947 or 16.5 percent), technology updates that were not explicitly due to AI (13,825 or 16.3 percent), market/economic conditions (12,021 or 14.2 percent), and closing (11,717 or 13.8 percent). Taken together, these suggest that businesses are pruning payrolls where it makes operational sense, not necessarily to reduce payroll costs at a time when replacing workers comes with a limited pool of qualified candidates and higher expectations for compensation.

Hiring plans were relatively few in February, although up 91.9 percent to 10,317 after 5,376 in January, and down 64.2 percent from 28,830 in February 2023. Importantly, the largest numbers of hiring announcements were in industries associated with more stable employment and better compensation. The largest number of announcements in February was in energy (3,492 or 33.8 percent of the total), followed by aerospace/defense (1,800 or 17.4 percent) and industrial products (1,598 or 15.5 percent).

This monthly report counts and categorizes announcements of corporate layoffs based on mass layoff data from state departments of labor. The job-cut report must be analyzed with caution. It doesn't distinguish between layoffs scheduled for the short-term or the long term, or whether job cuts are handled through attrition or actual layoffs. Also, the job-cut report does not include jobs eliminated in small batches over a longer time period. Unlike most economic data, this series is not adjusted for seasonal variation.

The job-cut report is basically a rehash of the weekly jobless claims report but provides additional insight into where layoffs are occurring. There is industry and geographic (states) detail that is not available with weekly jobless claims.