Job cut announcements in May hit the highest for the month since 2020, Challenger, Gray & Christmas said Thursday, while US weekly applications for unemployment insurance rose unexpectedly.
Employers announced 97,006 layoffs last month, up 16% from April and 3% from a year earlier, with the shift toward artificial intelligence still the leading reason for cuts, the outplacement firm said.
While monthly job cuts rose for the third straight month, layoffs from January to May were down 43%, totaling 397,755.
"On top of the headline AI story, we're seeing a sharp rise in cuts tied to acquisitions and mergers and a jump in bankruptcy-related losses, which tells me companies are restructuring aggressively as they reposition for an AI-driven economy," Andy Challenger, the firm's chief revenue officer, said in a statement. "The labor market is being reshaped by technology in real time."
Tech companies announced 38,242 job cuts in May, the highest monthly total for the sector since August 2024.
Last month, financial software firm Intuit (INTU) said it planned to reduce its workforce by about 17%. Cloud connectivity firm Cloudflare (NET) said it expects to cut about 1,100 roles as part of a restructuring.
The Challenger report arrives a day before the May nonfarm payrolls release. Economists surveyed by Bloomberg expect 85,000 new jobs, down from 115,000 in April, with the unemployment rate seen holding at 4.3%.
On Wednesday, ADP reported stronger-than-expected private-sector hiring for May.
Separately, the Department of Labor said initial jobless claims last week rose to 225,000 from a revised 212,000 the prior week and above the 215,000 consensus. Continuing claims fell by 8,000 to about 1.78 million in the week ended May 23.
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