Companies around the globe have ramped up job cuts, with blue-chips from Amazon (AMZN.O) to Nestle (NESN.S) and UPS (UPS.N) reining in spending while consumer sentiment dims and AI-focused tech companies start to replace jobs with automation.
According to a Reuters tally, American companies have announced more than 25,000 job cuts this month, not including UPS's 48,000 figure, which dates from the beginning of 2025. In Europe, the total tops 20,000, with Nestlé accounting for the bulk after last week’s 16,000-role reduction.
With economy-wide numbers on job cuts not available given the U.S. government is in the middle of its second-longest shutdown in history, investors are paying extra attention to these anecdotal stories of layoffs. That's even if year-end layoffs are common and many of the eye-catching cuts will be stretched out over a prolonged period.
"Investors are asking themselves, what does this mean? And specifically, what's the overall picture since we can't see it?" said Adam Sarhan, chief executive of 50 Park Investments in New York. Cuts like those at Amazon "tells me the economy is slowing down, not getting stronger. You don't have mass layoffs when the economy is strong."
CEOs WANT A RETURN ON BIG AI SPENDING
Amazon said it would cut up to 14,000 jobs from its corporate workforce, joining Target, Procter & Gamble and others in axing thousands of office roles. Reuters reported on Monday as many as 30,000 Amazon jobs could be eliminated.
The reasons for the cuts vary. Some, like Target and Nestle, have new CEOs eager to restructure their operations. Baby-apparel company Carter's is slashing 15% of office jobs as it struggles with hefty import tariffs imposed by U.S. President Donald Trump.
What stands out is the focus by companies like Amazon and Target on white-collar roles seen as vulnerable to AI-driven automation, rather than those on shop or factory floors. Some analysts say Amazon's move could be an early sign of deeper structural shifts as companies push to justify billions spent on AI tools.
Target's cuts affect 8% of its corporate staff but Amazon's cuts affect just 14,000 positions within its 1.5 million-strong workforce.
KPMG’s latest survey of U.S.-based executives released in September shows projected AI investment has jumped 14% since the first quarter to an average of $130 million over the next year. And 78% of executives say they are under intense pressure from boards and investors to prove AI is saving money and boosting profits.
The occupations most likely to be affected would be where entry-level work is replaced with automation, Bank of America economists wrote on Oct. 22. So far, however, businesses loaded with white-collar workers such as those in the information, finance, and professional services sector have seen job growth in tandem with increased AI usage, they wrote.
"I'm reticent to say it's AI just yet," said Allison Shrivastava, economist with Indeed Hiring Lab in Saratoga Springs, New York, who said the tech sector has been retrenching since a 2022 peak. "It has the potential to impact the labor market, but I don't think we're seeing that strong an impact right now."
LOW-HIRING, LOW-FIRING DOLDRUMS
With the U.S. government shut, data is at a premium. Weekly state jobless figures so far do not show a measurable surge in layoffs, but job growth remains subdued. Payroll provider ADP on Tuesday estimated an increase of 14,250 jobs in the four-week period ended Oct. 11.
Despite the headlines, economists say the labor market is stuck in a "low-hiring, low-firing phase", with firms quietly trimming headcount by not replacing vacated roles.
If layoffs accelerate, they could further weaken consumer confidence and the broader U.S. economy, already under strain from tariffs and inflation above Federal Reserve targets. Fed officials concerned about the job market worry the “low-hiring, low-firing” environment could slip towards faster layoffs.
"I describe this as a 'hold-your-breath' environment," Shrivastava said. "'Low-hire, low-fire' almost makes it feel like we're in this new equilibrium, where really companies are just holding their breath, trying to figure out what's going on."
