The pace of job cuts by U.S. employers accelerated again in March, a sign the labor market is starting to deteriorate in the face of ongoing inflation and high interest rates.

That is according to a new report published Thursday by Challenger, Gray & Christmas, which found that companies planned 90,309 job cuts in March, a 7% increase from the previous month and a 0.7% increase from the same time last year. 

It marked the highest monthly layoff total since January 2023.

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"Layoffs certainly ticked up to round out the first quarter, though still below last year’s levels," said Andy Challenger, senior vice president of Challenger, Gray & Christmas. "Many companies appear to be reverting to a ‘do more with less’ approach."

Technology companies bore the brunt of the job losses in March, with the industry shedding 14,224 employees. In total, the tech sector has lost 42,442 jobs since the start of the year.

The government followed with 36,044 layoffs in March, including 10,000 jobs from Veterans Affairs and 24,000 from the U.S. Army. It marks the highest monthly total for the sector since September 2011.

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Financial firms have also seen a sharp jump in layoffs so far this year, slashing 28,715 positions during the first quarter. However, that is down about 6% from the 30,635 cuts announced during the equivalent time period in 2023. 

Another source of layoffs in March was transportation companies, which have trimmed 15,746 jobs since the start of the year – a stunning 483% increase from the same time last year.

The top reason cited for job cuts last month was cost-cutting, which accounted for 66,302 of the layoffs during the first quarter. Companies also blamed restructuring, stores closing, poor market conditions and bankruptcy.

On the other end of the spectrum, companies planned to add just 36,795 positions during the first quarter, a 48% drop from the same period last year. It is the lowest number of announced hiring plans since 2016. 

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The labor market has remained historically tight over the past year, defying economists' expectations for a slowdown. Although economists say it is beginning to normalize after last year's blistering pace, it is nowhere near breaking. 

The data precedes the release of the more closely watched February jobs report from the Labor Department on Friday morning.

The unemployment rate is expected to hold steady at 3.9%.