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Looking For a Market Bottom? Pay Attention to Industrial Layoffs

Job losses have spread from technology firms to industrial ones like Dow.

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Jeff Kowalsky/Bloomberg

Everyone wants to know when the market will hit a bottom. RBC strategists see the answer in industrial layoffs. 

January has yet to end and more than 68,500 tech workers have been laid off. For tech, this follows rapid gains in staff numbers—companies hired eagerly during the shift to work-from-home.
employed over 1.6 million workers by the end of fiscal year 2021, doubling its 2019 count. Meta’s headcount grew about 60% over the pandemic.

Now, industrial giants like
are trimming their workforce, despite not witnessing a hiring boom. It’s all fairly nascent for industrial firms—Dow cut just 2,000 jobs—but if layoffs spike, it could mean the economy is in a recession and the market bottom is around the corner, Lori Calvasina, RBC’s head of equity research, wrote on Monday. 

“The stock market often does bottom well before layoffs in industries of excess are finished,” Calvasina said in her report, citing data from placement firm Challenger, Gray & Christmas. 

More than a decade ago, the S&P 500 hit a low of 676.53 in March 2009 after the housing bubble burst. That’s not long after industrial companies announced about 60,000 job cuts, the highest during the downturn. The early 2000s recession paints a somewhat similar picture, with the October 2002 low coming after the peak of industrial job losses.

“It’s worth noting that big spikes in Industrial layoffs occurred during each of the big periods of economic stress that we examined,” the note said.

To be sure, data still points to a healthy economy and a recession may never show up. Gross domestic product growth of 2.9% in the fourth quarter was a slight slowdown from the 3.2% growth in the previous quarter, but still evidence of a robust economy.  

“This time around, industrial layoffs have remained extremely low,” the note said. That “so far supports the soft landing thesis, in our view [and] we are optimistic this condition can remain in place.” 

Investors should also be wary of letting past performance dictate future decisions, but the data gives “us one more thing to check off in our list of things that we believe need to happen for the stock market broadly to bottom,” Calvasina said. 

Write to Karishma Vanjani at


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