The US labor market in 2026 presents a mixed picture: while overall job cuts are running well below last year’s pace, April saw a notable spike in layoffs, the third highest since 2009, driven largely by tech companies accelerating their AI investments at the cost of headcount.

Hiring plans have also pulled back sharply. Job openings remain healthy, and private sector hiring showed broad momentum in May, but uncertainty from the Iran war, tariffs, and the Fed’s next move continues to cloud the outlook.

Job Cuts

So far in 2026, US employers have announced 300,749 job cuts, down 50% from the 602,493 cuts recorded through April 2025.

U.S. employers announced 83,387 job cuts in April, a 38% increase from March’s 60,620 cuts, but a 21% decline from 105,441 cuts reported in April last year. This marks the third-highest job cut figures since 2009, following 105,441 in April 2025 and 671,129 in April 2020, as reported by Challenger, Gray & Christmas.

AI accounted for roughly 16% of all 2026 job cut plans, up from 13% through March.

Last week, Meta laid off approximately 8,000 employees worldwide, including several of Indian origin in the US and UK. This action aligns with Amazon’s workforce reduction strategy, which has announced a total of 16,000 job cuts this year, following 14,000 layoffs disclosed in October 2025.

The increase in layoffs in April may be linked to the employment trends in tech companies, especially those significantly adopting AI.

“Technology companies continue to announce large-scale cuts and are leading all industries in layoff announcements. They are also often citing AI spend and innovation. Regardless of whether individual jobs are being replaced by AI, the money for those roles is,” said Andy Challenger, workplace expert and chief revenue officer for Challenger, Gray & Christmas.

ALSO READ

Hiring Plans

Even new hirings are taking a hit. Hiring plans fell 69% in April to 10,049 from 32,826 in March. They are down 38% from the 16,191 hiring plans announced in April 2025. So far this year, employers have announced plans to hire 60,936 workers, down 13% from 70,058 new hires announced during the same period in 2025. Government led April hiring with 2,350 announced positions, followed by Technology with 1,980 and Food with 1,348, reads the Challenger, Gray & Christmas report.

Job opening: Govt Data

Going by the Labor Department data, the American job market is improving after a poor 2025, with an average job growth of 76,000 per month from January to April. Tax refunds resulting from President Trump’s tax cuts have positively impacted the economy this year.

According to the Labor Department, U.S. job openings increased to 7.6 million in April, up from 6.9 million in March, indicating a resilient labor market amidst economic uncertainty from the Iran war.

The department’s Job Openings and Labor Turnover Survey (JOLTS) revealed that layoffs decreased, but so did the number of Americans quitting their jobs. Furthermore, the report’s measure of gross hiring fell in April, indicating that businesses are still hesitant to hire new employees while retaining those they already have.

The US unemployment rate held at 4.3% in April 2026, in line with market expectations. However, the number of unemployed rose by 134,000 to 7.37 million, while total employment fell by 226,000 to 162.62 million.

The more recent data also paints a healthier scenario. Private sector employment increased by 122,000 jobs in May and pay was up 4.4 percent year-over-year, according to the May ADP National Employment Report produced by ADP Research in collaboration with the Stanford Digital Economy Lab. “Hiring was more broad-based in May than we’ve seen in the last few years. The labor market continues to show sustained momentum going into the summer hiring season,” said Dr. Nela Richardson, chief economist, ADP.

Takeaway

The rise in layoffs in April is likely connected to tech companies’ employment trends, particularly those heavily investing in AI. These companies are leading in layoff announcements, frequently referencing AI spending and innovation. The trend is likely to continue as AI spendings rise and adoption of AI increases.

“For now, financial markets are focused on the risk that inflation shocks from the Iran War and tariffs force the Fed to raise rates. That’s possible, but it would require the closure of the Strait of Hormuz to persist through the midterm elections. Is that plausible?

On the other hand, if the inflation shocks from the Iran War and tariffs fade, job growth will likely hold at its current pace. In that scenario, a tightening labor market would likely displace inflation as the Fed’s main area of focus,” says Bill Adams, Chief U.S. Economist, Fifth Third Commercial Bank.

Disclaimer: This report is based on data from Challenger, Gray & Christmas, the U.S. Department of Labor, and ADP Research, and is intended for informational purposes only. The figures and projections cited reflect conditions as of the reporting period and are subject to revision. References to geopolitical events, monetary policy, and economic forecasts represent the views of cited experts and do not constitute financial or investment advice.