Job Cuts Slow Down, But AI Remains a Key Factor

Phil Brancato, the chief market strategist at Ossac, suggests that investors should try to remove emotional biases from their investment choices.

Recent data indicates that the rate of job cuts decreased in July as companies geared up their hiring efforts. Despite this slowdown, artificial intelligence (AI) continues to be identified as a significant catalyst for layoffs.

Companies announced a total of 33,429 layoffs in July, which represents a 27% drop from June’s figure of 45,849 and a more substantial 46% decrease compared to the 62,075 layoffs reported for the same month last year, based on findings from Challenger, Gray & Christmas.

This number marks the lowest monthly total of layoffs in the past two years, since July 2024, when 25,885 cuts were reported. Remarkably, this trend has occurred five times this year, where monthly layoffs have been lower than the same month in the previous year.

For the year 2026, employers have announced 477,033 job cuts through July, reflecting a 41% decline from the 806,383 job cuts noted in the first seven months of 2025.

“Layoffs have noticeably slowed this summer,” commented Andy Challenger, a workplace expert and chief revenue officer at Challenger, Gray & Christmas. “The tech industry continues to make the bulk of layoff announcements, and AI remains a hot topic as investments in technology transform companies.”

He further noted that job opportunities have increased by 25% in comparison to last year, implying that rather than dismantling the labor market, AI is shifting it.

The tech sector accounted for 9,867 job cuts in July, bringing the yearly total to 149,023, which demonstrates a striking 67% increase year-over-year.

Financial institutions followed with 3,157 layoffs in July, resulting in a total of 18,626 cuts for the year, a 31% reduction from the previous year.

In contrast, the agency reported 2,962 layoffs in July, contributing to a year-to-date total of 20,752 cuts—93% lower than last year when federal layoffs were the primary factor behind the 292,294 job cuts during the same period.

AI was notably cited as the main reason for layoffs, with 10,970 job cuts attributed to it in July alone, making up 33% of the total layoffs. This marks the fifth consecutive month AI has been recognized as the primary cause for job cuts. To date, AI has been mentioned in 112,713 layoffs this year, equating to roughly 24% of all job cuts. Challenger, Gray & Christmas has tracked a total of 184,538 layoffs where AI was acknowledged as a reason since they started documenting AI-related layoffs.

Challenger’s report also points out the ambiguity surrounding AI-related layoffs. Some employers explicitly cite AI, while others refer to new technology’s introduction, which might suggest AI’s influence but isn’t always targeted directly at layoffs. Consequently, the agency keeps a separate category for tracking these instances.

“Referencing AI in a layoff announcement can attract investors, but it might put off current and potential employees, which is why it has become a frequently mentioned topic,” Challenger explained.

“As regulations around AI continue to evolve, companies may adopt a more cautious approach in their announcements, leading to greater uncertainty in tracking AI’s impact on employment,” he concluded.