A Report Says The Worst AI-Related Labor Fears Are Not Materializing Yet. Jobs Are Falling While Hiring Is On The Rise.

Announced layoffs fell in July while announced hirings by companies reached their highest level for the month since 2022, according to a report by global outplacement firm Challenger, Gray & Christmas.

"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 percent, so while AI is shifting the labor market, it is not dismantling it."

U.S.-based employers announced 33,429 job cuts in July, down 27 percent from the 45,849 cuts announced in June, the firm stated. Compared to a year ago, July announced layoffs were down 46 percent. The July figures were also the lowest announced layoff total for a month in the last two years.

Overall, announced layoffs are down 41 percent in 2026 compared to 2025. The report stated that at this time last year, 806,383 layoffs had been announced compared to only 477,033 this year.

However, at this point last year, DOGE, the Elon Musk-led effort to shrink the federal workforce, had announced more than 275,000 layoffs, spiking the numbers.

The Technology sector had the most announced layoffs at 9,867 in July. It has announced 149,023 so far this year, a significant increase over 2025, when the sector had announced 89,251 layoffs.

For the year, the sector alone accounts for 31 percent of all announced job reductions.

"Tech remains the center of gravity for this year's cuts, and AI is still the reason companies give," Challenger said.

The report noted that AI was the most cited reason for layoffs for July and the year. In July, 33 percent, or about 10,970 jobs, were cut. For the year, AI has been cited as the reason behind 24 percent of announced layoffs, or about 112,713 layoff announcements.

"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."

On the hiring side of things, July saw announced hires rise 47 percent from June to July, with employers announcing plans to hire 16,095 workers. The report stated that it was the highest July total since 2022.

Overall, this year, companies have announced that they will hire 107,500, up 25 percent from the same point last year. The firm noted in its report that this is the strongest January-to-July total since 2023.

The leading industry for announced hirings was aerospace/defense, followed by technology and automotive.

"Employers are hiring more than they were at this point last year, which bucks the trend we've seen since 2020. The demand is showing up in aerospace, energy, and manufacturing, work that happens on a floor rather than a screen," Challenger said.

The firm's report counts expected and announced corporate activity. The figures from the U.S. Bureau of Labor Statistics have shown a job market that has been relatively stable when compared to last year.

The June jobs report from the U.S. Bureau of Labor Statistics had the unemployment rate at 4.2 percent in June, almost unchanged from the previous month. The report stated that about 57,000 jobs were added to the economy in June.

According to the BLS, there were 7.1 million unemployed adults in the U.S. in June. That figure was nearly identical to June 2025. One significant difference noted by the BLS was that the number of people identified as long-term unemployed, out of work for 27 weeks or more, was at 1.9 million in June 2026, an increase of 286,000 over the prior year.

The BLS is expected to release its report on July unemployment figures on Friday.