US Firms' January Job Cuts Surge 118%... "Largest Since 2009"

"Companies Appear Pessimistic About This Year"
Amazon and UPS Account for Large Share... Impact of AI Technology
At Odds with Fed's View of a "Stabilizing Labor Market"

While the US Federal Reserve (Fed) said last week that there were signs of stabilization in the labor market, US companies carried out the largest round of job cuts for January since 2009. Analysts say companies with a pessimistic outlook for this year’s economy have begun preemptively scaling down.

According to Bloomberg and the Financial Times (FT) on the 5th (local time), US employment research firm Challenger, Gray & Christmas (CG&C) reported that job cuts announced by US companies in January totaled 108,435 positions. This is more than double (up 118%) the figure for the same period a year earlier. Foreign media pointed out that this is the largest January total since 2009.

The report showed that three companies accounted for most of January’s layoffs: Amazon, UPS, and Dow. Amazon decided to cut 16,000 jobs, UPS plans to cut up to 30,000 jobs, and Dow plans to reduce its workforce by 4,500. Nike has also signaled upcoming job cuts.

Among companies, there were 7,624 cases in which artificial intelligence (AI) was explicitly cited as a reason for layoffs. FT pointed to AI as a structural factor behind the weakening in hiring, noting that "two-thirds of the decline in job openings is occurring in professional and business services, a sector directly affected by AI-driven automation."

Andy Challenger, Chief Revenue Officer (CRO) at Challenger, said, "Layoff announcements are usually plentiful in the first quarter, but the January figure this time is particularly high," adding, "This means that most of the layoff plans were drawn up at the end of last year, which suggests that companies are not optimistic about the economic outlook for 2026."

FT also noted that several other economic indicators point to weakening fundamentals in the US economy. It cited the number of job openings falling to 6.5 million in December last year, the lowest level in five years, and the sharp increase in initial jobless claims to 231,000 in January.

These concerns are somewhat at odds with the Fed’s recent view. Fed Chair Jerome Powell said at a press conference after the January Federal Open Market Committee (FOMC) meeting last week that, regarding US labor market conditions, "(Economic) data suggest that after a period of gradual weakening, labor market conditions may have stabilized." At its January meeting, the Fed left the federal funds rate unchanged at the current level of 3.50–3.75%.

Samuel Tombs of independent research firm Pantheon Macroeconomics told FT, "It may be premature for the Fed to have shifted its focus from the labor market to inflation."

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