By Martin Baccardax

U.S. employers have been shedding jobs at a breakneck pace this year, according to data published Thursday, as tariff uncertainty weighs on outlooks and government spending cuts hammer the federal workforce.

Employers unveiled just under 94,000 job cuts in May, outplacement group Challenger, Gray & Christmas reported, a modest decline from April but a 47% increase from the same period last year. In fact, just under 700,000 layoffs have been announced over the first five months of the year, a staggering 80% increase from the same period in 2024.

"Tariffs, funding cuts, consumer spending, and overall economic pessimism are putting intense pressure on companies' workforces. Companies are spending less, slowing hiring, and sending layoff notices, " said Challenger, Gray & Christmas' senior vice president, Andrew Challenger.

The broadly defined services sector, the key driver of U.S. economic growth, saw the highest job cut total in May in five years, with just over 34,000 layoffs announced.

On a year-to-date basis, retailers have shed the most jobs in the private sector, with just under 76,000 layoffs, while tech has lost just under 75,000.

The report also noted that around 40% of all job cuts this year, across all sectors, are tied to cost-reduction efforts lead by Elon Musk's Department of Government Efficiency, or DOGE.

"This includes direct reductions to the federal workforce and its contractors," the report stated. "Additionally, DOGE Downstream Impact, such as the loss of funding to private nonprofits, was cited in another 10,459 cuts."

The Challenger, Gray data was published just before a weaker-than-expected reading for weekly jobless claims, which rose to 247,000 for the period ended on May 31. It was the highest claims reading since October 2024.

Continued claims, a loose proxy for the time a workers takes to find a new role, eased modestly to just over 1.9 million.

Wall Street remains keenly focused on jobs data this week. Treasury bond yields rallied following both data releases, with rate-sensitive 2-year notes falling three basis points to 4.842%. Benchmark 10-year notes were last seen trading at 4.328%.

The CME Group's FedWatch, meanwhile, continues to peg the first rate cut of the year in September, with the odds of a 25-basis-point reduction rising only slightly to 57.4%.

Write to Martin Baccardax at martin.baccardax@barrons.com

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June 05, 2025 08:57 ET (12:57 GMT)

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