Labor Market Shows Signs of Weakening, New Report Reveals

Key Insights

• July saw a 9% year-over-year increase in job cuts, despite a monthly decline from June.
• Hiring intentions for July hit the lowest point since 2009, with this year's hiring pace being the slowest since 2012.
• Technology firms experienced the highest layoffs in July amid ongoing cost-reduction efforts.

Recent employment figures confirm that the U.S. labor market continued to soften throughout July.

According to Challenger, Gray & Christmas, U.S. employers eliminated 25,885 jobs in July—a 47% decrease compared to June. However, layoffs were still 9% higher than in July of the previous year, marking the most significant July job cuts since 2020.

Hiring plans also slowed considerably, with employers intending to hire only 3,676 new workers in July. This is the lowest monthly hiring figure since December and the smallest July hiring total recorded since 2009.

Andrew Challenger, Senior Vice President at Challenger, Gray & Christmas, stated, "The job market is clearly cooling, with hiring at its lowest level in over a decade. While manufacturing sectors are seeing increased cuts, most industries are reducing layoffs compared to last year."

This report aligns with other recent data suggesting a weakening labor market, including July's disappointing private sector hiring numbers. Additional labor market statistics are expected from the Bureau of Labor Statistics on Friday.

Technology Sector Drives Job Reductions

The technology industry led all sectors in job cuts during July and continues to dominate layoffs throughout the year. Additionally, the services sector and food manufacturing also reported substantial job losses.

Challenger noted, "The technology sector is undergoing significant transformation. Coupled with missed earnings and years of aggressive hiring, it’s unsurprising that this industry leads in job reductions."

The primary cause of layoffs remains cost-cutting measures, with market conditions and department closures also playing major roles. Notably, technological advancements such as artificial intelligence have not been cited as reasons for job cuts since April, according to the report.

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