U.S. layoffs hit four-year September low, but employers aren't hiring to match

U.S. employers announced 43,281 planned job cuts in September, the lowest total for the month since 2022 and an 18% drop from August, according to a report released Thursday by the outplacement and executive coaching firm Challenger, Gray & Christmas. The figure caps a third quarter in which announced layoffs fell sharply from both the prior quarter and a year earlier, even as the pace of new hiring announcements slowed to levels not seen since the early 2010s.

The report found that September's total was down 20% from the 54,064 cuts announced in the same month a year ago, and that third-quarter layoff plans of 129,591 were down 43% from the second quarter and 36% from the same period in 2025. Through nine months, employers have announced 573,195 job cuts, down 39% from the 946,426 recorded over the same span last year. Excluding a wave of federal government reductions that swept through 2025, the year-to-date decline is a more modest 15%.

The numbers behind the slowdown

Technology remained the single biggest source of job cuts, with employers in the sector announcing 10,799 reductions in September, up 77% from August and pushing the industry's year-to-date total to 165,925 — more than any other sector tracks and 54% above the same point in 2025. Food producers announced 7,326 cuts, the second straight month above 7,000, with Washington state orchards and other agricultural employers accounting for 5,396 of the month's cuts in notices citing weak demand. Non-profit organizations announced 4,742 cuts, their highest monthly total of the year.

Artificial intelligence was cited directly in 3,961 of September's job-cut announcements, roughly 9% of the monthly total. For the year, AI has been named in 120,136 announced cuts, about 21% of all 2026 reductions and, according to the report, still the single most-cited reason for layoffs year-to-date, ahead of market and economic conditions and store or plant closings.

The slack was not made up by hiring. Employers announced plans to add 90,787 workers in September, which Challenger, Gray & Christmas described as the lowest total for the month since 2011 and down 23% from the 117,313 hiring plans announced in September 2025. Announced seasonal hiring was particularly muted: retailers Spirit Halloween and Michaels together announced 62,000 seasonal positions, compared with 100,800 a year earlier. Retail nonetheless led all sectors in September hiring announcements, with 65,150 planned additions.

How companies got here

The pullback in both cuts and hiring comes against a backdrop that Federal Reserve Vice Chair Philip Jefferson described in an October 1 speech at the University of Virginia's Darden School of Business as resilient but uneven. Jefferson said the economy grew at a 2.4% annualized pace in the first half of 2026, powered substantially by AI-related business investment, while the unemployment rate held at 4.1% in August, a level he characterized as close to maximum employment. He also noted hearing "anecdotal evidence of elevated price sensitivity" among lower-income consumers, and said inflation — with the personal consumption expenditures index at 3.4% in August — "has been too high for too long."

That combination of a cooling but not collapsing labor market, persistent inflation and a Fed still focused on price stability has left many employers neither shedding workers aggressively nor expanding payrolls with much confidence. Jefferson noted that the Federal Open Market Committee had raised its benchmark rate by a quarter point, to a range of 3.75% to 4%, a move he said was intended to keep longer-term inflation expectations anchored even as the economy absorbs cascading shocks from energy prices, the buildout of AI infrastructure and shifting trade policy. For employers already weighing whether to add staff, a tighter policy rate adds to the cost calculus around expansion.

Job cuts tied specifically to restructuring, which had been the leading cause of layoffs for five straight months, slipped to the second-most common reason in September behind market and economic conditions, which accounted for 8,789 of the month's cuts, or 20% of the total. Closings followed, accounting for 7,719 cuts and 99,092 for the year, while demand downturns were cited in 6,515 September cuts, the highest monthly total for that reason since February 2023.

Who is affected

By geography, California has recorded the most announced layoffs this year with 114,818, followed by Washington state with 52,313, Texas with 46,098, Georgia with 41,952 and Michigan with 33,627. Transportation has been the second-most affected industry overall in 2026 with 44,430 cuts, up 190% from the same period last year, followed by health care and products with 37,417 cuts and consumer products with 30,652. Government-sector cuts, which dominated headlines earlier in the year amid federal workforce reductions, have fallen 92% from 2025's pace and now total 23,010 for the year, down from 299,755 over the same period in 2025.

On the hiring side, retailers accounted for 66,557 of the 210,612 positions employers have announced plans to fill this year, the most of any sector, followed by technology companies with 22,361 planned hires and aerospace and defense firms with 21,841. Manufacturing and industrial employers together account for 32% of all hiring plans announced in 2026, even as they represent only 14% of announced job cuts, a split the report's authors pointed to as evidence that factory-floor and skilled-trade employers are still trying to add workers even as office-based industries pull back.

"Companies are in a wait-and-see period right now. Employers are facing high energy costs, an uncertain war in Iran, a rate hike that could make hiring more expensive, plus the likelihood of surging healthcare costs. We've seen layoff activity subside over this year, and September continues to illustrate this point," said Andy Challenger, workplace expert and chief revenue officer for Challenger, Gray & Christmas.

What happens next

Challenger added that the absence of a typical seasonal hiring surge is itself a signal worth watching heading into the holiday quarter. "Hiring plans are up over the year, but we're not seeing the surge of hiring plans that come with the holiday season, which suggests a very cautious approach," he said in the report. With year-to-date hiring announcements of 210,612 running only 3% ahead of last year's pace — a gap that had been far wider through August — retailers and other seasonal employers appear to be trimming headcount commitments even as they avoid the deeper layoffs seen in prior downturns.

The next monthly reading, covering October, will show whether the wait-and-see posture persists once holiday staffing decisions are finalized and whether cost pressures that Jefferson flagged — energy prices, AI infrastructure spending and trade policy — continue to weigh on hiring plans without yet triggering a broader round of job cuts.