Are layoffs data really collapsing? JPMorgan: The data is not as severe as the headlines suggest. Recent reports have shown a surge in layoffs across various industries, leading many to believe that the job market is deteriorating rapidly. However, upon closer examination, JPMorgan analysts argue that the numbers are being exaggerated by sensational headlines. They point out that while certain sectors are experiencing layoffs, others remain stable or are even hiring. Overall, the labor market's health may not be as dire as some media outlets portray. It is important to consider the broader context and detailed data before drawing conclusions about a significant downturn.

JPMorgan Chase points out that although the latest labor market data may seem alarming on the surface—whether it’s the surge in initial jobless claims or the layoffs announced at levels not seen since 2009—these figures are actually heavily distorted by seasonal factors, extreme weather, and double counting in statistical methods.

According to the latest data, during the week ending January 31, the number of Americans filing for unemployment benefits jumped from 209,000 to 231,000. Excluding the weeks heavily affected by seasonal distortions around Thanksgiving, this is the highest level since mid-October last year. This spike will undoubtedly trigger market sensitivities, but in JPMorgan Chase’s view, there’s no need for excessive concern.

According to Kyber Trading Desk, JPMorgan Chase’s North America Economic Research team analyzed in a recent report released on February 5 that this increase is largely within expectations. First, residual seasonal factors suggest that claims should naturally begin to rise during this period. More importantly, short-term disruptions come from weather—specifically, “Winter Storm Fern” and the subsequent extreme cold—which likely temporarily boosted the number of people applying for unemployment benefits during the statistical week. Such weather-induced fluctuations are usually short-lived and do not indicate a fundamental weakening in labor demand.

JPMorgan Chase emphasizes that behind the frightening headlines created by this series of “noise,” the market’s fundamentals have not experienced a structural deterioration. Investors should not be misled by superficial data fluctuations into panic selling, because whether it’s the rise in initial claims or layoffs by tech giants, once these special factors are stripped away, the resilience of the U.S. labor market remains intact, and these current figures do not constitute conclusive evidence of an imminent recession.

Continued Unemployment Claims Data Reveals Potential Resilience

The data on continued unemployment claims offers a more stable perspective. For the week ending January 24, the number of continued claims increased slightly from 1.819 million to 1.844 million. Although weekly data can fluctuate, JPMorgan Chase still considers this a “good number.”

More importantly, the four-week moving average, which smooths out short-term volatility, is currently at its lowest level since October 2024. As JPMorgan Chase has previously discussed, the decline in continued claims is a positive signal, indicating that the ability or willingness of unemployed workers to re-enter the workforce still exists. While improvements in this indicator may not immediately translate into a drop in the unemployment rate, it effectively counters the narrative that the labor market is rapidly collapsing.

Challenger Layoff Report Is Misleading; Major Company Layoffs Are Severely Double-Counted

The Challenger layoff report released on the morning of the same day made headlines with a shocking headline: it stated that the number of layoffs announced in January reached 108,000, the highest since 2009 for the same period. However, JPMorgan Chase bluntly pointed out that this description of severity is misleading. While technically accurate, when comparing with historical charts, the January figures this year are closer to recent January levels, and are far from the conditions during the 2009 crisis.

Further dissection of the data reveals that out of the 108,000 layoffs, 30,000 came from UPS and 16,000 from Amazon. UPS’s layoffs stemmed from the company reducing transportation services targeted at Amazon, and although Amazon announced layoffs, they mainly involved office staff, with some logistics roles possibly to be replenished later.

More critically, this report is very likely to have double-counted Amazon’s layoffs. Amazon announced a target of 30,000 layoffs as early as October last year, and at that time, the Challenger report showed 33,000 tech industry layoffs in October, which probably already included most of Amazon’s planned cuts. Now, with 16,000 layoffs again counted in January, although part of the original 30,000 target, they are treated as new layoffs. This statistical approach artificially inflates the January layoff figures, making the data appear much more severe than the actual situation.

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