July layoffs drop to lowest level in 2 years, Challenger says

• Year-to-date job cuts through July totaled 477,033, down 41% from 806,383 in the same period of 2025
• Technology sector led all industries with 149,023 cuts this year (31% of total), up 67% from last year, with AI cited as the primary driver
• AI has been attributed to 112,713 job cuts in 2026 so far (24% of all cuts), marking five consecutive months as the top-cited reason for layoffs

Summary: U.S. Job Cuts Fall to Two-Year Low in July

Key Findings:

U.S. companies announced 33,429 job cuts in July 2026, marking a 27% decline from June's 45,849 and a 46% drop from July 2025's 62,075, according to Challenger, Gray & Christmas. This represents the lowest monthly total in two years since July 2024 (25,885 cuts).

Year-to-Date Performance:

Through July 2026, employers announced 477,033 job cuts—a 41% decrease from 806,383 cuts during the same period in 2025. Notably, hiring has increased 25% year-over-year, suggesting workforce transformation rather than wholesale reduction.

Sector Analysis:

The technology sector leads layoffs with 149,023 cuts year-to-date (67% increase vs. 2025), accounting for 31% of all announced job reductions. The entertainment sector recorded 18,626 cuts (down 31%), while government saw 20,752 cuts (down 93% from prior year's federal workforce reductions).

AI Impact:

Artificial intelligence emerged as the dominant driver, cited in 10,970 July layoffs (33% of total). AI has been the top-cited reason for five consecutive months, accounting for 112,713 cuts year-to-date (24% of all reductions). Since tracking began, AI has been linked to 184,538 total job cuts.

Market Implications:

Andy Challenger notes that while AI is "reshaping organizations," particularly in tech, it's "not dismantling" the labor market given concurrent hiring increases. However, he warns that evolving AI regulations may make future impact tracking "more opaque" as companies adjust their messaging strategies to balance investor appeal with employee concerns.