Layoffs Hit Two-Year Low Amid AI-Driven Hiring

By the Editorial Team · Friday, August 7, 2026

U.S. job cuts fell to their lowest level in two years in July, with employers announcing 33,429 layoffs, a 27% drop from June and a 46% decline year-over-year. Despite AI-driven layoffs remaining a significant factor, especially in the tech sector, hiring surged by 47% from June, signaling a labor market that is adjusting and growing amid technological and geopolitical challenges.

Job cuts in the United States dropped to their lowest level in two years in July, reflecting a labor market showing resilience amid economic challenges posed by geopolitical tensions and the rapid advancement of artificial intelligence (AI), according to a report released Thursday by Challenger, Gray & Christmas.

In July, employers announced 33,429 layoffs, marking a decline of 27% from June and a 46% decrease compared to July 2025. Year to date through July, companies have disclosed 477,033 job cuts, which is 41% fewer than the same period last year. Despite ongoing layoffs, the total number of job disruptions continues to trend downward.

AI remained the most cited reason for job cuts for the fifth consecutive month. Since 2023, when AI was first tracked as a separate cause, it has been linked to approximately 184,538 layoffs. In July, 10,970 job cuts were attributed to AI, contributing significantly to the total 112,713 layoffs connected to AI so far this year.

The technology sector reported the highest number of layoffs in July, accounting for 9,867 job cuts and totaling 149,023 layoffs for the year. This represents a 67% increase over the same timeframe in 2025 and comprises nearly one-third of all announced job cuts in 2026. Other sectors experiencing notable layoffs in July included financial services, government agencies, healthcare, transportation, and media.

Despite job cuts, hiring activity has increased. Employers announced intentions to hire 16,095 workers in July, a 47% rise from June and a substantial increase compared to 3,200 hires announced in July 2025. The July hiring numbers represent the highest monthly total for that period since 2022.

Andy Challenger, chief revenue officer of Challenger, Gray & Christmas, noted that while AI continues to reshape organizations and drive restructuring, the labor market is not being dismantled but rather reconfigured. He highlighted that layoffs are concentrated primarily in the tech industry, but overall hiring remains robust and is up 25% compared to last year.

The improved hiring climate follows a period of caution when companies slowed recruitment due to concerns over economic uncertainties, including tariffs imposed during the Trump administration and instability linked to the conflict in the Middle East. The data suggests businesses are adapting to these pressures while integrating new technologies, indicating a complex but evolving employment landscape.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.