U.S. Job Cuts Drop to Two-Year Low in July 2026

Layoffs decline sharply despite economic headwinds

U.S. employers announced 33,429 job cuts in July 2026, marking the lowest monthly total in two years and a 46% decline from the same period in 2025, according to data from outplacement firm Challenger, Gray & Christmas.

The figure represents the smallest number of announced layoffs since July 2024, when roughly 26,000 cuts were reported. The decline comes despite persistent inflation linked to the Iran war and widespread corporate investment in artificial intelligence technologies.

"The pace of layoffs fell dramatically this summer," said Andy Challenger, chief revenue officer at Challenger, Gray & Christmas. "Layoff plans continue to be announced primarily in tech, and artificial intelligence is still the story, as investments in the technology reshape organizations."

AI drives tech-sector cuts but impact remains contained

Artificial intelligence has been the leading cause of layoffs for five consecutive months, accounting for 33% of all job cuts announced in July. However, economists note these reductions remain largely concentrated within the technology industry rather than spreading across the broader economy.

Supporting data from unemployment claims reinforces the resilient labor market picture. The four-week average of initial jobless claims has fallen below 200,000 for the first time since October 2022, according to PNC Economics Research.

"Recently laid-off workers are finding jobs as fast as the economy is creating new ones," said Carl Weinberg, chief economist at High Frequency Economics. "That suggests the labor market is still balanced."

Hiring remains modest as job market stabilizes

While employers have pulled back on layoffs, hiring activity remains subdued. Government data shows job openings across the country are steady but continue to track below pre-pandemic levels.

The Labor Department's July employment report, scheduled for release on Friday, is expected to show payroll gains of 97,500 jobs, according to economists polled by FactSet. That forecast follows a disappointing June, when employers added only 57,000 positions.

The national unemployment rate stands at 4.2%, low by historical standards. However, specific segments face challenges. Career platform Handshake reports that job listings for entry-level corporate roles traditionally filled by recent college graduates have fallen 15%, while applications per opening have surged 30%.

Why it matters

The sharp decline in layoffs suggests that fears of AI-driven mass unemployment may be overstated, at least in the near term. While technology companies continue restructuring around artificial intelligence capabilities, the broader economy is absorbing displaced workers without triggering cascading job losses. For business leaders, this data indicates that strategic workforce planning around AI adoption can proceed without necessarily requiring large-scale reductions—though competition for entry-level positions is intensifying as companies become more selective in hiring.

These figures were first reported by CBS News, based on data from Challenger, Gray & Christmas.