U.S. employers ramped up layoffs in May as the artificial intelligence (AI) rollout was the leading factor cited by companies cutting their workforces, new data shows.
Companies announced 97,006 job cuts in May – an increase of 16% from the 83,387 cuts in April and an increase of 3% from the 93,816 cuts announced last May, according to a recent report by global outplacement and executive coaching firm Challenger, Gray & Christmas.
AI was the leading reason cited for job cuts for the third consecutive month, with 38,579 cuts attributed to AI. It’s the highest monthly total for the reason since Challenger began tracking it in 2023 and accounted for 40% of all the job cuts announced in May.
“The labor market is being reshaped by technology in real time. AI is now the leading reason companies give for cutting jobs and the primary industry citing it is technology,” said Andy Challenger, labor and workplace expert and chief revenue officer of Challenger, Gray & Christmas.
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The tech sector announced 38,242 job cuts in May – the highest for the sector since August 2024. In 2026 so far, tech firms have announced 123,653 cuts, which is an increase of 66% from the same period in 2025, and it leads other sectors in job cuts this year by a wide margin.
“AI isn’t yet the jobpocalypse some predicted. Like spreadsheets and email before it, the technology will ultimately make workers more productive, but our data shows companies are already acting on it, citing AI for more cuts than any other reason,” Challenger explained.
“The open question isn’t whether AI changes the workforce, but how fast,” he added.
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The transportation sector announced the second-most job cuts in May with 6,909 cuts, bringing the 2026 total to 40,388 and an increase of 449% from the same period a year ago.
Services firms cut 6,268 jobs in May to bring the sector’s 2026 total to 17,065 – a decrease of 61% from the same period last year.
Healthcare and products manufacturers have also announced 30,414 job cuts so far this year, which represents a 17% increase from the same period a year ago.
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Bankruptcy-related layoffs were the second-leading reason cited for job cuts, accounting for 5,637 in May. That’s the most bankruptcy-linked layoffs since February 2025 when 35,172 were announced.
Market and economic conditions have been cited for 69,645 cuts in 2026 so far, while closings accounted for 66,733 and mergers and acquisitions were attributed to another 11,989 in that period. The number of job cuts linked to mergers and acquisitions is up more than six-fold from the 1,889 attributed to that reason in the same period last year.
“On top of the headline AI story, we’re seeing a sharp rise in cuts tied to mergers and acquisitions and a jump in bankruptcy-related losses, which tells me companies are restructuring aggressively as they reposition for an AI-driven economy,” Challenger said.
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