The job market is strong. So why did layoffs double in January?

During periods of economic recession or financial instability, companies may experience a decline in revenue, reduced consumer demand, or increased costs. In response, they may implement layoffs as a cost-saving measure to streamline operations and maintain profitability.

Financial firms announced the largest number of layoffs last month, at more than 23,200, which represents the highest number of job cuts for the industry since September 2018, when more than 27,000 jobs were cut. One of the biggest layoff announcements in the sector came from Citigroup, which said it plans to cut 20,000 jobs.

Tech employees suffered the second-largest number of layoffs, with almost 16,000 people losing their jobs, according to the analysis. Alphabet-owned Google, Microsoft and Salesforce were among the big tech companies slashing thousands of jobs last month.

Some companies are seeking to cut costs amid the rise in interest rates, while others are shedding workers after a hiring binge during the pandemic. Other businesses are refocusing to invest in artificial intelligence, which has prompted job cuts in some of their non-AI business units.

Federal Reserve Chair Jerome Powell said this week that the central bank wants to see the labor market cool without causing a jump in joblessness — part of a so-called soft landing, or a cooling of inflation and economic growth, while avoiding a recession.