Employers announced 33,429 job cuts in July, the lowest level in two years, according to Challenger, Gray & Christmas. This marks a 46% decline from July 2025 and a 27% drop from June 2026, signaling further stabilization in the U.S. labor market ahead of the July jobs report.
The Labor Department is set to release its monthly jobs data on Friday, with economists surveyed by Bloomberg projecting 80,000 new payrolls and the unemployment rate holding steady at 4.2%. This follows June’s report, which showed 57,000 jobs added, below expectations. Private-sector hiring data from ADP also fell short of forecasts, though wage growth for job-switchers improved slightly.
Layoffs and Unemployment Claims Decline
Layoff announcements in July were concentrated in the technology sector, where AI-driven restructuring accounted for 30% of cuts—nearly 10,000 positions. Financial services, government, and healthcare also saw reductions, while transportation layoffs remained elevated due to global trade pressures. Despite these cuts, weekly unemployment claims ticked up by just 1,000 to 199,000, near historic lows not seen since 1969. The four-week average of claims dropped below 200,000 for the first time since October 2022, according to PNC Economics Research.
Wage Growth Shifts to Lower-Income Households
An analysis from the Bank of America Institute noted that after-tax wage growth for lower-income households surpassed higher-income earners for the first time since December 2024. The report attributed this to strong job growth and increased job-to-job movements among lower-wage workers. Gig economy participation also rose, with more employed Americans supplementing income through side work.
Hiring Remains Modest but Stable
While layoffs have declined, hiring has not accelerated significantly. Job openings remain below pre-pandemic levels, and June’s payroll growth of 57,000 fell short of expectations. Economists polled by FactSet forecast a modest rebound in July, with payroll gains projected at 97,500. Carl Weinberg, chief economist at High Frequency Economics, described the labor market as “still balanced,” noting that laid-off workers are finding new jobs as quickly as they are being created.
Industry-Specific Trends
- Technology: AI-driven layoffs dominated, with 149,000 positions eliminated in the first seven months of 2026.
- Transportation: Second-highest layoffs year-to-date (41,748) due to trade and pricing pressures.
- Financial Services: 3,157 cuts announced in July.
- Healthcare: 1,251 layoffs reported.
The mixed signals—declining layoffs but tepid hiring—suggest a labor market in slow but steady recovery, with resilience despite inflationary pressures and technological disruption.