Layoffs announced by U.S.-based employers totaled 270,416 in the first quarter, the highest tally for a start to the year since early 2020 as companies looked to trim costs in preparation for a potential recession, outplacement firm Challenger, Gray & Christmas said.

The January-to-March total marked a 396% increase from the first quarter of 2022. That was the highest first-quarter total since 346,683 cuts were announced in the early days of the pandemic, though still well below the 497,215 layoffs announced in the third quarter of 2020.

“We know companies are approaching 2023 with caution, though the economy is still creating jobs,” Senior Vice President Andrew Challenger said in a statement. “With rate hikes continuing and companies reining in costs, the large-scale layoffs we are seeing will likely continue.”

Challenger noted 102,391, or 38% of all layoffs so far in 2023, are in the technology industry, the biggest chunk among all sectors. While tech skills remain in demand across several industries, tech industry job cuts are at their highest level since the 2001-2002 period, with layoffs announced this year by companies including Amazon, Microsoft and the parent firms of Facebook and Google.

After technology, industries announcing the most layoffs in the first quarter included financial services at 30,635, up 419% from a year earlier; healthcare at 22,950, increasing 65%; and retail at 21,426, marking a rise of 1,125%. Challenger researchers said the retail layoffs could be a sign of decreased expectations for consumer spending in coming months.

Supply Chain Pressures Ease

Global supply chain disruptions that peaked in the early months of the pandemic, as production was halted in some overseas industrial plants and ships were stranded in cargo ports, are showing further signs of easing in the early months of 2023.

Monthly tracking by the Federal Reserve Bank of New York showed supply chain pressures, gauged by factors such as cost inflation, order backlogs and delivery delays, running close to historical averages for March.

Regional Fed officials said Thursday that recent movements in its supply chain index “suggest that global supply chain conditions have largely normalized after experiencing temporary setbacks around the turn of the year.” Despite clearing of disruptions in several regions, a New York Fed statement said there are lingering issues including delivery times in Europe and purchase delays involving Taiwanese suppliers.

Other analysts note that the status of supply chains can have a considerable impact on warehousing and other logistics space demand in many regions. Supply chains have improved significantly in places including the Port of New York and New Jersey, which led U.S. ports in February for cargo containers handled as it continues to clear out empty containers that filled its docks after delayed processing during the pandemic.

“We expect a stronger second half of the year, as we have been in discussions with many importers that shifted volume to us from elsewhere and are now committed to keeping that volume in our gateway,” New York Port Authority Chairman Kevin O’Toole said in an April 3 statement.

Jobless Claims Decline

Initial claims for unemployment insurance totaled 228,000 for the week that ended April 1, down 18,000 from the prior week, the Labor Department reported Thursday. Claims remained historically low despite rising layoffs affecting several industries this year, though some including construction are still struggling to fill vacant positions.

The government said the four-week average for initial claims was 237,750, marking a decline of 4,250 from the previous week. Continuing claims in all programs, tracked on a more delayed basis, totaled about 1.9 million for the week that ended March 18, down 1,183 from the prior week but higher than the approximately 1.7 million claims in the comparable week of 2022.

The national unemployment rate for March has not been released, but the rate remained close to a 50-year low at 3.6% for February. The Labor Department reported earlier this week that jobless rates were lower in February than a year earlier in 228 of the nation’s 389 metropolitan regions, higher in 131 areas and unchanged in 30 regions.

Though construction employment rose in nearly four-fifths of all metropolitan areas in the past 12 months, “contractors are still struggling to fill jobs,” Ken Simonson, chief economist for the Associated General Contractors of America trade group, said in a statement an April 5 regarding the regional numbers.

“There were far more job openings in construction at the end of February than construction employees hired in the entire month,” Simonson said.