Big US companies set to lay off at least 52,000 workers as jobs market cools

Big US companies have this week revealed plans to lay off tens of thousands of workers, in the latest sign of how employers are trimming their workforces after years of robust hiring.

Amazon, UPS, Dow, Nike, Home Depot and other companies said they would eliminate more than 52,000 jobs combined, with several saying they needed to slim their organisations amid lingering economic uncertainty and mounting pressure to invest in AI. 

The latest batch of lay-offs was concentrated among a small group of large companies, but it highlights concerns from some policymakers at the Federal Reserve and private economists that the once red-hot jobs market is weakening.

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“Companies are increasingly discussing lay-offs and appear eager to use artificial intelligence to reduce labour costs,” said David Mericle, chief US economist at Goldman Sachs.

Many companies rapidly expanded after the start of the pandemic in 2020, as online shopping boomed and huge stimulus programmes led to a big rebound in hiring after a turbulent period at the height of the Covid crisis.

But the labour market has stagnated in the past year as uncertainty over trade and AI leaves employers reluctant to hire or fire employees.

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Job losses and unemployment claims have ticked up, but both remain below pre-pandemic levels. At 4.4 per cent last month — down from 4.5 per cent in November, unemployment had “shown some signs of stabilisation”, Fed officials said on Wednesday.

“While we’ve seen an uptick in lay-offs at high-profile companies, lay-offs over the past year have not been abnormally high, especially when compared to pre-pandemic levels,” said Felix Aidala, an economist at online job search group Indeed. “One reason these signals feel mixed is that hiring is much slower than we’ve historically seen.”

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The US economy added a meagre 50,000 jobs in December. And as hiring has slowed, the median length of unemployment stretched to 11.4 weeks last month, the longest since 2021.

“It’s making job loss (or just the prospect of it) a much more difficult experience for workers than aggregate indicators would imply alone,” Aidala said.

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Some top Fed and Treasury officials say that any weakness in the labour market during the first quarter will probably reverse later on in the year. The Fed cut borrowing costs by 0.75 percentage points in 2025 amid signs that, after years of strong growth, the labour market was cooling.

Companies in the latest round of lay-offs have mostly signalled that they were cutting jobs to make the organisations slimmer and more efficient, rather than responding to macroeconomic trends.

On Tuesday, UPS chief financial officer Brian Dykes told analysts that he would offer buyouts to drivers as the logistics company cuts up to 30,000 jobs this year to “help us to right-size” as it ships fewer packages for Amazon.

Amazon the next day announced its second round of lay-offs in three months, reducing its staff by 16,000 in a move aimed at “removing bureaucracy”, senior vice-president Beth Galetti wrote in an email to employees. 

Dow chief executive Jim Fitterling said on Thursday that the chemicals company would pursue “a comprehensive and radical simplification of our operating model” that would eliminate 4,500 employees.