Last month saw the first signs of companies making cuts to stave off the further threat of recession. However, the cracks had commenced long before Klarna’s infamous reductions were announced last month. The UK Government is also reducing the number of civil servants. And not just the ones who attended Boris Johnson’s parties at Downing Street:
When talk of the Digital Revolution increased in the early 2010s, there were concerns about job losses. About what will happen to all the lorry drivers with the advent of autonomous vehicles. About what will happen to call centres with the rise of the chatbot and its machine learning. However. One always hoped that the new players in the tech sector would offer a solution. Or better yet, offer jobs to those who would become displaced by digitalization.
Whether it’s because they were over-priced to start with though, the tech sector is also shedding jobs. And this week was no different.
Jobs growth not growing as expected
Yesterday Reuters released a story suggesting that demand for labour was starting to slow. Economists polled by Reuters had forecasted private payrolls increasing by 300,000 jobs. The actual figure was 128,000 jobs. Seen as a huge blow for the recovery in the U.S.
However, it’s not all bad. The U.S. is generating 400,000+ new jobs each month for the last 12 months. Raising the question: ‘is demand starting to cool?’
It’s not just the U.S. that is feeling the pinch. India has seen some devastating cuts amongst its’ leading tech firms recently too:
Digital health platform Mfine laid off 500 employees last week. This accounted for half of the entire workforce, and Mfine is the ninth company in the startup space to cut staff in India since April. All of this is leading some commentators to suggest that “Winter is coming”. And not just a “Crypto Winter” but a much wider cull of employees across the tech and startup ecosystems.
#BacktoWork at Tesla
Having moved its corporate HQ to Austin, Texas in December last year, Elon Musk has demanded change. His new Texas-based employees may not be as happy as they were when the HQ opened. Musk wants them all back in the office… Or else.
Following on from his letter to employees, Musk got into a row with Australian tech billionaire Scott Farquhar. The row was about the value of putting an end to the pandemic-era habit of remote working. Musk pointed out how he is trying to get rid of the ‘chaff’, and how “recessions serve a vital economic cleansing function.”
Fortunately, Tesla’s share price is on the up this week, so maybe it’s the right time for Musk to be coming out with soundbites like the ones above.
Microsoft changes its outlook
A few weeks ago we wrote about how Apple and Samsung have had to revise their targets for 2022. This week Microsoft is the next leading Tech firm to revise its targets. TradingView offers insights into what is happening at the firm. Which is expected to lower its revenue forecast by about $1 billion.
Part of the reason is because Microsoft receives around 50% of its revenue from outside the U.S. The dollar might be strong compared to some currencies; however, it has been weakening. This in turn has led to a potential slowdown in hiring at the company. It hasn’t affected Microsoft’s share price much yet, with markets generally performing slightly better than previous weeks.
How did FAANG stocks perform?
Whilst Memorial Day may have made this week a little shorter, there is no doubt that markets are showing a little more optimism. Even amongst all the talk of layoffs, revised earnings and the dreaded recession.
Apple is up 1%, Google’s Alphabet by 3% and Amazon by an incredible 9%. Facebook’s Meta is closing in on 5.5% and even Neflix has managed to show a 5% increase. All in all, quite a comforting show by the FAANGs this week so far (correct at 13.30 GMT).
Tesla is also up 2% rounding off an all together successful week for U.S. companies that often set the trends for the rest of global markets.
Salesforce is the surprise package this week. The stock price of the Tech firm has shown a massive 17.5% increase on last week. A reassuring sign for some of the companies in the Tech sector who are shedding staff now.
Author: Andy Samu
#FAANG #BacktoWork #Tesla #SalesForce #Microsoft #Jobs
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