U.S. Job Cuts Fall to Two-Year Low, While AI Remains Leading Reason for Layoffs

U.S.-based employers announced 33,429 job cuts in July, the lowest monthly total in two years, even as artificial intelligence remained the leading reason cited for workforce reductions, according to a report from Challenger, Gray & Christmas.

Layoff announcements declined 27% from June and 46% from July 2025, pointing to a significant slowdown in planned workforce reductions compared with both the previous month and the same period last year.

Artificial intelligence was the leading reason cited for job cuts for a fifth consecutive month, accounting for approximately 10,970 planned layoffs in July, or nearly one-third of the month’s announced reductions.

The technology sector recorded the largest number of cuts, with 9,867, followed by finance with 3,157, government with 2,962, and services with 2,581.

Through the first seven months of 2026, U.S. employers announced 477,033 job cuts, down 41% from the 806,383 reductions announced during the same period in 2025.

Technology also remained the industry with the highest number of announced layoffs year to date, totaling 149,023 through July. Transportation followed with 41,748, healthcare and healthcare products with 34,426, services with 23,942, and government with 20,752.

At the same time, hiring announcements showed improvement. Employers disclosed plans to add 16,095 workers in July, the highest total for the month of July since 2022.

“Hiring has also increased over last year by 25%, so while AI is shifting the labor market, it is not dismantling it,” Andy Challenger of Challenger, Gray & Christmas said in the report.

The July figures show a U.S. labor market in which overall layoff announcements have declined substantially from 2025 levels, while AI-related workforce changes remain concentrated in sectors undergoing rapid technological transformation.

Source: Challenger, Gray & Christmas, Inc.