U.S. Layoffs Surge to a 22-Year High as Companies Slash Jobs Amid Cost Cuts and AI Adoption

06 November 2025

Signage for a job fair is seen on 5th Avenue after the release of the jobs report in Manhattan, New York City, U.S., September 3, 2021. REUTERS/Andrew Kelly

October’s layoffs hit the highest level in more than 20 years as U.S. companies announced 153,074 job cuts in the month, reflecting a 175 % increase from a year ago and pushing the year‐to‐date total to 1,099,500 figures that revive concerns over how the labour market is adapting to cost pressures and the rise of automation.

According to data from the outplacement firm Challenger, Gray & Christmas, U.S.-based employers revealed that October’s 153,074 announced layoffs represent the largest number of cuts for that month since at least 2003. The cumulative total through October has now reached over 1.09 million job‐cut announcements, a stark 65 % rise from the 664,839 announced during the same period last year.

The pattern suggests more than a temporary blip. Industries that appeared resilient earlier this year are now registering structural change. Technology companies led the surge in October with 33,281 job‐cut announcements, up sharply from 5,639 the previous month. Warehousing firms followed with 47,878 announced job cuts for the month, making them the largest single sector by number of cuts in the period.

At the heart of the problem are three interlinked forces: the need to cut costs, the accelerating adoption of artificial intelligence and automation, and weakening demand from consumers and businesses alike. Challenger’s workplace expert, Andy Challenger, described the shift as partly a correction from the pandemic hiring boommbut emphasised that tougher conditions are now emerging as companies realign to a new normal.

Cost‐cutting remains the top reason cited by employers for the job cuts, with approximately 50,437 of the October announcements tied to cost reduction. AI and automation came in second, accounting for 31,039 job cuts in the month. These figures mark the first large‐scale wave of layoffs in which technology itself, most visibly AI, is explicitly a driving factor alongside traditional economic pressures.

The fact that October registered such a spike is notable, as historically the fourth quarter tends to see fewer layoff announcements before the holiday season. The disruption of this seasonal norm further underscores how far the labour market may be shifting.

This news arrives at a fraught moment for the U.S. economy. The federal government’s protracted shutdown has delayed official labour market data, meaning analysts and markets are increasingly reliant on private indicators like the Challenger report. With official numbers missing, the sharp rise in job cuts raises red flags about underlying weakness despite headline employment figures still showing resilience.

The implications stretch beyond headline job counts. When companies begin mass announcements of cuts especially in sectors like technology, warehousing and retail it reverberates through consumer sentiment, regional economies and broader employment dynamics. Workers laid off now may struggle to find new roles in a labour market that is itself shifting, and that in turn may lead to longer‐term unemployment or underemployment.

From an investor standpoint the surge in layoffs adds to caution. Labour market softness can feed into slower consumer spending, weaker economic growth and increased risk of recession. Some sectors already face downturns in demand; the fact that mass job cuts are gathering pace suggests companies are not just pausing hiring but actively restructuring. The wave of cuts is about more than cyclical necessity it hints at structural change.

In sum this surge in layoffs offers an urgent snapshot: the U.S. labour market has moved from a “no‐hire, no‐fire” phase to one where job cuts are accelerating, and the signal is that broader economic headwinds and automation are now converging. If hiring remains weak and job cuts persist, the labour market may become more vulnerable than many realise. For now the trend points away from stability and toward transition, and how workers, companies and policymakers respond will shape the next chapter in American employment.