US job cuts hit a two-year low in July even as downsizing in the technology sector continued, Challenger Gray & Christmas said Thursday.
Employers in the world's largest economy announced 33,429 layoffs last month, the lowest monthly total since July 2024," the outplacement firm said. That's down 46% year over year and 27% lower compared with cuts announced in June, it said.
"The pace of layoffs fell dramatically this summer," said Andy Challenger, the firm's chief revenue officer. "Layoff plans continue to be announced primarily in tech, and artificial intelligence is still the story, as investments in the technology reshape organizations."
Tech companies announced 9,867 job cuts in July, bringing the sector's 2026 total to 149,023. That's 67% higher compared with the tally for the same seven-month period last year, according to the outplacement firm.
Last month, Microsoft (MSFT) said it was planning to cut about 2.1% of its global workforce, or about 4,800 roles.
"Tech remains the center of gravity for this year's cuts, and AI is still the reason companies give," said Andy Challenger.
The Federal Reserve said late in July that "job gains have kept pace with the workforce, and the unemployment rate has changed little." At the time, the Federal Open Market Committee maintained its policy rate for the fifth consecutive time.
"Labor market conditions have improved substantially since the middle of 2025, adding further evidence that the slowdown in job growth that we saw last year was due to the combined effects of lower immigration flows and tariff-driven uncertainty," Jefferies Chief US Economist Thomas Simons said in a report e-mailed to.
Data from the Bureau of Labor Statistics are likely to show Friday that the US economy added 80,000 nonfarm jobs last month, compared with a 57,000 increase reported for June, according to a Bloomberg-compiled survey. The unemployment rate is seen unchanged at 4.2%.
Separately, government data on Thursday showed that initial jobless claims rose by 1,000 to 199,000 for the week through Aug. 1 from the previous week's average that was adjusted upward by 1,000. The consensus was for a 205,000 print in a Bloomberg poll. Seasonally adjusted continuing claims reached 1.80 million for the week ended July 25, while Wall Street projected 1.79 million.
On Wednesday, ADP (ADP) data showed US private-sector employment increased less than expected last month as the gains were concentrated in just services.
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