For the fifth month in a row, U.S. employers explaining why they cut jobs pointed to artificial intelligence more than any other reason. That isn’t a worker survey or an economist’s estimate — it’s what companies themselves wrote down when they announced the cuts, tracked by the outplacement firm that has logged layoff reasons since the 1990s. The same report also found total layoffs at a two-year low and hiring plans at their strongest July level since 2022, a split picture for any household watching a paycheck or a job posting this fall.
July’s Layoffs Hit a Two-Year Low, and AI Still Topped the List
Employers filed fewer layoff notices with Challenger, Gray & Christmas in July than in any month in two years, and for the fifth straight month, the single reason they gave most often wasn’t a merger, a plant closing or a lost contract. It was artificial intelligence. The firm is a Chicago-based outplacement and executive-coaching company that has published a monthly tally of announced job cuts, broken down by the reason each employer gave, for decades.
U.S.-based employers announced 33,429 job cuts in July, the lowest monthly total in two years and the fewest since July 2024. Of those cuts, employers cited artificial intelligence for 10,970, or 33 percent — the fifth consecutive month AI has been the single most-cited reason on the firm’s list, ahead of market and economic conditions, closings, restructuring and lost contracts.
The July total was down 27 percent from the 45,849 cuts Challenger recorded in June, when AI had already logged its fourth straight month atop the list. Through July, employers have announced 477,033 cuts for the year, down 41 percent from the 806,383 announced over the same seven months of 2025, a decline driven in part by a sharp pullback in federal cuts compared with last year’s government workforce reductions.
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How Challenger Separates “AI” Cuts From an Ordinary Tech Upgrade
The category is murkier than one number suggests, and Challenger’s own July report shows its methodology at work in two examples. Visa announced a 7 percent workforce reduction and directly attributed it to an efficiency push in which artificial intelligence would reshape jobs — a clean case Challenger counted as AI. A Bronx hospital system, Montefiore, eliminated 12 utilization-review nursing positions after adopting software from a company called Datavant. The New York State Nurses Association filed a class-action grievance and said in a press release that the hospital was replacing nurses with AI, a claim that forced a required meeting with union leaders under its contract; the hospital has called that characterization misleading.
Because Montefiore itself never confirmed AI as the reason, Challenger did not fold those 12 cuts into its AI total. Instead the firm logged them under a separate category it calls “Technological Update (possibly AI),” used when a company cites new technology without tying the decision directly to AI. That category recorded 20,219 cuts in 2025 alone, a sign that the fifth-straight-month AI figure is Challenger’s most conservative read of what employers are willing to state in writing, not an estimate of AI’s full reach into hiring decisions.
Which Industries Cut the Most in July
Technology led every sector again, announcing 9,867 job cuts in July for a year-to-date total of 149,023 — up 67 percent from the same point in 2025 and now accounting for 31 percent of all cuts announced this year. Financial firms followed with 3,157 cuts in July, then government agencies at 2,962. Government’s year-to-date total of 20,752 is down 93 percent from the 292,294 cuts announced through July 2025, when federal workforce reductions were driving the numbers; Transportation moved the opposite direction, up 303 percent for the year to 41,748 cuts as the sector absorbs higher costs and shifting trade conditions.
The broader pattern cuts against the headline number: 18 of the 30 industries Challenger tracks have announced fewer cuts this year than at the same point in 2025. Retail is down 84 percent to 12,946 cuts, and warehousing is down 58 percent to 16,328. The increases are concentrated in a handful of sectors — Technology up 67 percent, Transportation up 303 percent, and Pharmaceutical up 312 percent to 13,666 — which means a household’s exposure to this year’s layoff wave depends heavily on which of those specific industries employs the paycheck in question, not on a single national average.
Hiring Plans Rose to Their Best July Since 2022
The same report that tracked AI cuts also found employers announcing plans to hire 16,095 workers in July, up 47 percent from June and well above the 3,200 hiring plans announced in July 2025. That’s the strongest July for announced hiring since 2022, when firms announced 25,506 positions. Aerospace and defense companies led with 4,625 announced hires, followed by technology at 2,470 and automotive at 2,068 — hiring concentrated in sectors building physical products rather than software. “Hiring has also increased over last year by 25 percent, so while AI is shifting the labor market, it is not dismantling it,” said Andy Challenger, the firm’s chief revenue officer, in the report.
What Thursday Morning’s Report Will Show
Challenger publishes on a fixed monthly schedule, and the August job-cut report is due out at 5:30 a.m. Eastern on Thursday, September 3 — the same morning this article is being read. That report will show whether artificial intelligence extends its run as the top-cited layoff reason to a sixth straight month, or whether it slips for the first time since the streak began. For a household weighing a job change, the more useful number in the meantime isn’t the cut total by itself; it’s that the industries doing the hiring this July — aerospace, automotive, technology itself — overlap heavily with the industries doing the cutting, which is exactly why Challenger keeps publishing both lists side by side.
This article was produced with AI assistance and reviewed by a human editor. Figures are linked to their primary sources; where a claim could not be verified from the public record, we say so.
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