Job Market Shows Signs of Strain as Layoffs Rise Beyond Expectations

The labor market may be weakening more significantly than economists have acknowledged, according to a UBS analysis. While many describe the current environment as one of low hiring and low firing, evidence suggests layoffs are occurring at average or elevated rates.

Recent data paints a concerning picture: unemployment claims have surged to their highest level in four years, while August layoff announcements ROSE 13% year-over-year. This trend contradicts the prevailing narrative that employers are retaining workers despite sluggish hiring.

Tariffs have compounded the problem, discouraging hiring and forcing some companies to reduce headcount. The UBS team, led by economist Jonathan Pingle, warns that with layoffs continuing at normal levels and hiring slowing further, the economy faces heightened recession risks.