US Companies Focus on Layoffs Over Q2 Growth... Widespread Large-Scale Restructuring Expands

US Blue-Chip Companies Mention Labor Costs Less Often
Indicating Reduced Hiring Scale
Layoffs Spread Across Manufacturing, Retail, and More

Analysis shows that leading U.S. companies are focusing more on cost reduction than growth in the second quarter of this year. The large-scale layoffs that began last year in the IT industry are spreading across various sectors.

On the 1st (local time), Bloomberg reported that the number of times companies included in the S&P 500, a representative U.S. stock index, mentioned quarterly "labor costs" related to their earnings decreased by 80% in the second quarter compared to the first quarter.

[Image source=AP Yonhap News]

This survey estimated the number of mentions from the 1st to the 28th of last month, marking the start of the second quarter. Bloomberg explained that although the data only covers the first month of the second quarter, the decline compared to the previous quarter is excessively large. In the first quarter, companies mentioned recruitment costs and labor costs 8,051 times in earnings-related reports, but last month, the number was only 1,645.

Bloomberg stated that the decrease in the number of times companies mentioned labor costs indicates a reduction in both the number of employees and hiring scale. Companies are significantly cutting employment-related expenses to improve management efficiency.

In fact, since the first quarter of this year, the market has seen a notable trend of employment reductions among U.S. companies. Meta, the parent company of Facebook, has initiated plans to cut 10,000 employees over the coming months. Meta’s Chief Financial Officer (CFO), Susan Li, said during a conference call on the 26th of last month, "We will focus on increasing efficiency, including layoffs and direct restructuring." E-commerce platform Amazon.com tightened its belt by cutting 27,000 employees in the first quarter, the largest scale since the company's founding.

Mark Zuckerberg, CEO of Meta

Moreover, this year, large-scale layoffs are spreading not only among IT companies but also among manufacturing and retail companies. 3M, famous for ‘Post-it’ notes, announced last week plans to cut 6,000 employees as a cost-saving measure.

Retail clothing company Gap also announced on the 25th of last month that it would restructure about 1,800 employees. This layoff scale is more than three times the 500 employees announced in September last year. Gap expects to save $300 million annually through this reduction and stated that not only general employees but also higher-level store positions could be subject to layoffs.

Companies that focused on expanding their workforce during the COVID-19 period are now emphasizing "efficiency" and are determined to cut costs.

Robert Shane, Chief Investment Officer (CIO) of Blanc Shane Asset Management, explained, "U.S. companies have excelled at gaining a competitive edge in the market through strong employment, but recently they are trying to maintain profitability in response to recession forecasts," adding, "This trend has been evident in many quarterly earnings announcements over the past few days."

This content was produced with the assistance of AI translation services.