U.S. factories cut employment for the first time since 2020

Employment declined at US service providers and manufacturers in November for the first time since mid-2020 amid tepid demand and elevated costs, a survey from S&P Global showed.

The S&P Global flash composite employment index slid 1.6 points to 49.7, just below the level that separates expansion and contraction.

The group’s measure of overall business activity was unchanged in November, and for fourth month, remained less than a point above the stagnation reading of 50.

“Job shedding has spread beyond the manufacturing sector, as services firms signaled a renewed drop in staff in November as cost savings were sought,” Sian

Jones, principal economist at S&P Global Market Intelligence, said in a statement.

Headcounts in the service sector declined for the first time since June 2020, while manufacturing payrolls shrank for a second month.

Waning demand conditions and still-elevated cost pressures were “commonly mentioned” by businesses as reasons for letting workers go, the report showed.

Employment growth has been the economy’s linchpin, and a sustained weakening in the labor market that includes a pickup in layoffs risks reviving concerns about a recession in 2024.

While the survey noted business mentions of hiring freezes because of margin compression, a composite measure of input costs slid to the lowest level since October 2020.

Selling prices increased at a faster rate, but the index remained below the average of the past three years.

Businesses appeared less upbeat about the future as well, due to growing concerns among service providers.

While manufacturers were more optimistic about output prospects, their counterparts in the service industry were less sanguine because of concerns about customer demand.