The daily business briefing: January 19, 2023
Microsoft announces another 10,000 layoffs, December retail sales fell more than expected, and more
Microsoft to lay off 10,000 in latest tech sector cuts
Microsoft announced Wednesday it would lay off another 10,000 employees, adding to a wave of job cuts at major technology companies bracing for a possible recession. The tech sector has already seen tens of thousands of layoffs in recent months as companies that experienced strong growth earlier in the pandemic, as people shifted work, study, and play online, have found themselves with too many workers as workplaces and schools returned to something close to pre-COVID normal. CEO Satya Nadella said the cuts would affect less than 5 percent of the software giant's workers, and would be completed by late March.
December retail sales fell as inflation hit holiday shoppers
Retail sales fell 1.1 percent in December, their biggest monthly decline of the year, the Commerce Department reported Wednesday. Analysts surveyed by Refinitiv had expected sales to drop just 0.8 percent. The grim end of the crucial holiday shopping season showed that shoppers are cutting back as they get spooked by high inflation and credit-card rates, and the threat of a recession. Retail sales also fell in November. December is usually the year's peak sales month. "We expect this softening trend to continue, especially if the looming slowdown in job gains makes people less willing to draw down savings accumulated during COVID," Ian Shepherdson, chief economist at Pantheon Economics, wrote in an analysis.
Amazon to end AmazonSmile charity program
Amazon announced Wednesday that it is ending its AmazonSmile charitable program, which has let customers designate a charity to receive a donation from the company of 0.5 percent of their purchases, Bloomberg reported. The announcement in a blog post came as the online retail giant launched a new round of layoffs that will affect 18,000 employees. Amazon has donated $500 million to charities over the 10 years of the AmazonSmile program in the United States, the United Kingdom, and Germany. The money was divided among about one million charities that received an average $230. "With so many eligible organizations ... our ability to have an impact was often spread too thin," Amazon said. The company will continue other philanthropic programs.
Wholesale prices fell more than expected in December
Wholesale prices fell by 0.5 percent in December, the most since April 2020 at the start of the coronavirus crisis, the Labor Department reported Wednesday. Economists surveyed by Dow Jones had predicted a decline of just 0.1 percent. The core producer price index, excluding volatile food and energy costs, rose 0.1 percent, in line with estimates. For the year, the PPI, which measures final demand prices across hundreds of categories, rose 6.2 percent, down from November's 7.3 percent pace and March's 11.7 percent peak. December's annual pace was the slowest since March 2021. Much of the decline was due to a 7.9 percent drop in energy prices.
Stocks rattled as weak holiday shopping stokes inflation, recession fears
U.S. stocks fell sharply on Wednesday after a larger-than-expected drop in retail sales over the weak holiday shopping season intensified worries about high inflation and an economic slowdown. The Dow Jones Industrial Average and the S&P 500 fell 1.8 percent and 1.6 percent, respectively. It was the worst day in more than a month for both of the U.S. benchmark indexes. The tech-heavy Nasdaq fell 1.2 percent. U.S. stock futures remained under pressure early Thursday, with the Dow and the S&P 500 down 0.7 percent at 6:45 a.m. ET. Nasdaq futures were down 0.9 percent. Safer assets, including bonds and gold, were rising, The Wall Street Journal reported.