Tech layoffs not a bellwether for cuts in other industries: Morgan Stanley

Tech employees in companies starting from Asana To Amazon Meta These layoffs have been a winnowed result of massive cuts that were not seen since the Covid-19 pandemic. However, Morgan Stanley analysts said in a Thursday note that they don’t consider these layoffs to be a “harbinger for changes” for the wider labor pool.

Analysts said that the high market cap of tech companies and the “idiosyncratic hiring in tech” relative to the rest have led to tech layoffs having an enormous impact on perceptions.

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However, analysts pointed out that tech sector layoffs have been limited to 187,000 since December 2021. [but] Only 0.1% of the total US payrolls are below this level. Payrolls at tech and adjacent companies rose sharply because of aggressive hiring. [their] Pre-pandemic level[s]”,” which is the market leader, has been lagging 2019 peak employment until recently.

Morgan Stanley anticipates a “sharp” drop in employment growth. Morgan Stanley cites slower consumer demand as the trigger for hiring reductions “across many sectors of our economy”.

Analysts said that major job losses in non-tech industries were unlikely as “the” analysts believe there are no significant technological changes. [U.S.] Economy at large is still short of staff.”

Although executives may be keen to reduce labor costs and make savings, they stated that “there seems to be very little fat to cut.”

Analysts wrote that the market may not be interested in hearing the perception of cost efficiency or scrupulous hiring practices. Senior executives in internet companies and other markets need to “evaluate how to better manage cash flow” to adapt to the “slower “23 world,” according to the analysts.

However, they said that tech layoffs aren’t yet “the canary within the coal mine”.

— CNBC’s Michael Bloom contributed to this report.