Layoffs in July hit their lowest level in two years – a sign of a resilient labor market despite big economic shocks from the war in Iran and the rapid rise of artificial intelligence, according to a report Thursday.
US-based employers announced 33,429 job cuts in July – down 27% from the previous month and 46% lower than the same month last year, Challenger, Gray and Christmas said in a new report.
So far this year through July, employers have announced 477,033 job cuts – down 41% compared to the first seven months of 2025, according to the firm.
Companies are still laying off employees, but not as much as last year – even as AI came in as the leading reason for job cuts for the fifth consecutive month, Challenger said.
“The pace of layoffs fell dramatically this summer. Layoff plans continue to be announced primarily in tech, and artificial intelligence is still the story, as investments in the technology reshape organizations,” Andy Challenger, workplace expert and chief revenue officer for Challenger, Gray & Christmas, said in a statement.
“Hiring has also increased over last year by 25%, so while AI is shifting the labor market, it is not dismantling it.”
So far this year, AI has been cited in 112,713 job cut announcements – including 10,970 in July, according to the report.
Since 2023, when Challenger started tracking AI as a distinct reason for layoffs, the new tech has been linked to 184,538 job cuts.
In July, technology was the sector with the most job cuts, announcing 9,867 layoffs for a total of 149,023 so far this year.
That’s 67% more layoffs than the same period last year and just under a third of all job cuts in 2026.
“Tech remains the center of gravity for this year’s cuts, and AI is still the reason companies give,” Challenger said.
Financial firms, government agencies, services, health care, transportation and media also saw significant layoffs in June, the firm said.
Challenger also said hiring has picked up, after companies halted taking on new employees as they feared economic shocks from President Trump’s tariffs and the Middle East conflict.
Employers announced plans to hire 16,095 workers in July – 47% higher than the previous month and much higher than last July’s 3,200 new hires.
It’s the highest hiring total for July since 2022.
So far this year, companies have announced plans to hire 107,500 workers – up 25% from the same seven-month period last year and the strongest total since 2023, according to the report.
Aerospace and defense industries led hiring plans in July. Technology and automotive industries have also seen most of the hiring this year.
“Employers are hiring more than they were at this point last year, which bucks the trend we’ve seen since 2020,” Challenger said. “The demand is showing up in aerospace, energy, and manufacturing, work that happens on a floor rather than a screen.”
However, Challenger’s report is just a collection of hiring plans, not official government data.
The Bureau of Labor Statistics is scheduled to release its official jobs report on Friday morning, and economists expect it will show a boost in hiring after June’s surprisingly slow month.
June’s nonfarm payroll employment is estimated to jump by just 83,000 – an increase from 57,000 the previous month. The unemployment rate is forecast to remain unchanged at 4.2%.
On Wednesday, ADP released its private jobs report, which showed that hiring at private firms slowed dramatically in July – coming in below estimates.
Nonfarm job growth excluding government positions fell to 44,000 in July, below June’s downwardly revised 95,000 and missing the forecast for 75,000 jobs.
All of the net job gains came from the services sector, which added 47,000 jobs, while the goods-producing industry lost 3,000 roles.
