Layoffs in the U.S. dropped in July to their lowest point in two years, according to new data, offering fresh evidence that the labor market is holding up despite pressure from inflation tied to the Iran war and the rapid spread of artificial intelligence.
Employers announced 33,429 job cuts in July, a 46% decline from the same month last year, according to outplacement firm Challenger, Gray & Christmas. It marked the lowest monthly total since July 2024, when companies announced about 26,000 layoffs.
Weekly unemployment claims are also pointing to a low level of job losses. The four-week average of initial jobless claims has fallen below 200,000 for the first time since October 2022, according to PNC Economics Research.
“The pace of layoffs fell dramatically this summer,” Andy Challenger, workplace expert and chief revenue officer at Challenger, Gray & Christmas, said in a statement. “Layoff plans continue to be announced primarily in tech, and artificial intelligence is still the story, as investments in the technology reshape organizations.”
Challenger said artificial intelligence has been the top reason cited for layoffs for five consecutive months, representing 33% of all job cuts announced in July. Even so, economists say AI-related layoffs remain largely concentrated in the technology sector.
“Recently laid-off workers are finding jobs as fast as the economy is creating new ones,” Carl Weinberg, chief economist at High Frequency Economics, wrote in a research note. “That suggests the labor market is still balanced.”
Still, the broader hiring picture remains restrained. Although employers have largely avoided major rounds of firing, government labor data shows job openings nationwide have held steady while remaining below their pre-pandemic level.
The Labor Department is set to release July hiring figures on Friday. Economists surveyed by FactSet expect payrolls to rise by 97,500. In June, employers added just 57,000 jobs, a weaker-than-expected gain.
Although the nation’s unemployment rate is low by historical standards, at 4.2%, some groups report difficulty finding jobs. Amid increasing corporate investment in AI, job listings for entry-level corporate roles traditionally available to recent college graduates have fallen 15%, according to career platform Handshake. Meanwhile, the number of applications per job has surged 30%.
Alain Sherter
