Job cuts slowed in July as companies stepped up their hiring plans, while artificial intelligence (AI) continues to be cited as a leading reason for workforce reductions, new data shows.
Companies announced 33,429 job cuts in July – a decrease of 27% from the 45,849 announced in June, and a level that’s down 46% from the 62,075 cuts planned in the same month last year, according to data from Challenger, Gray & Christmas.
The total of 33,429 layoffs announced last month is the lowest monthly total in two years since July 2024, when there were 25,885 cuts announced, the firm noted. It’s also the fifth time this year the monthly job cut figures were lower than the corresponding month a year ago.
So far in 2026, employers have announced 477,033 job cuts through July, which comes as a 41% decline from the 806,383 cuts announced in the first seven months of 2025.
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“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,” said Andy Challenger, workplace expert and chief revenue officer for Challenger, Gray & Christmas.
“Hiring has also increased over last year by 25%, so while AI is shifting the labor market, it is not dismantling it,” Challenger added.
The tech sector announced 9,867 job cuts in July to bring the industry’s total for this year to 149,023 – a figure that’s a 67% increase from the same period last year.
Layoffs in the tech sector account for 31% of all job cuts announced this year, and Challenger noted that tech “remains the center of gravity for this year’s cuts, and AI is still the reason companies give.”
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Financial firms accounted for 3,157 cuts in July, ranking second among industries, which brought the sector’s total for the year to 18,626 – down 31% from a year ago.
Government agencies announced 2,962 cuts in July, bringing the total for the year to 20,752. That figure is 93% lower than last year, when the 292,294 cuts through July were largely driven by federal workforce reductions.
Across industries, AI was the dominant reason cited by employers for workforce reductions, as it was attributed to 10,970 cuts announced in July, or 33% of the total.
July was the fifth consecutive month in which AI was the top reason cited for layoffs, and so far this year it has been cited in 112,713 job cut announcements, accounting for about 24% of all cuts. Since the firm first started tracking AI as a distinct reason for workforce reductions, Challenger, Gray & Christmas has tracked AI as being the reason cited in 184,538 job cuts.
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Challenger’s report noted that there remains ambiguity about what constitutes an AI-related cut, with some employers explicitly citing that as a reason, whereas others may point to new technology deployments and allude to AI indirectly without being linked to the cuts, which is why the firm tracks those announcements with a separate category.
“Naming AI in a layoff announcement can win over investors while pushing current and prospective employees away. That’s why the messaging has swung from hedging to aggressively citing it,” Challenger said.
“As regulations start to take shape, companies will be even more careful in their announcements, which would make tracking the impact of AI on jobs more opaque,” he added.
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