The U.S. labor market is flashing red across the board. While official government data remains paused due to the government shutdown, private-sector reports are sending an unmistakable signal: layoffs are soaring, hiring is collapsing, and artificial intelligence is quietly replacing workers at an unprecedented pace.
In October alone, U.S.-based employers announced 153,074 job cuts, according to Challenger, Gray & Christmas report released Thursday.
That's a 175% increase from the same month last year, and the highest October total since 2003.
"October's pace of job cutting was much higher than average for the month," said Andy Challenger, chief revenue officer at the firm. "This comes as AI adoption, softening demand, and rising costs drive belt-tightening and hiring freezes."
Companies cited cost-cutting as the top reason for October layoffs, followed closely by AI-driven restructuring. Combined, these two forces accounted for over 81,000 job cuts last month alone.
Job Cuts In 2025 Just Crossed The 1 Million Mark
So far this year, U.S. employers have announced 1,099,500 job cuts, a 65% increase from the same period in 2024 and already surpassing last year's total by 44%. This puts 2025 on pace for the worst year of layoffs since the pandemic in 2020.
The October figure alone also represented a 183% spike from September, and the volume of companies announcing cuts rose to nearly 450, up from under 400 the month before.
Typically, companies avoid layoffs in the fourth quarter to sidestep reputational risks around the holiday season.
"This is the highest total for October in over 20 years," Challenger said, noting that, like in 2003, a disruptive technology is reshaping the workforce—this time, it’s AI.
AI Adoption And Automation Hit Hard
The technology sector led the pack in job cuts for October, with 33,281 layoffs—up from just 5,639 in September. Year-to-date, tech companies have cut 141,159 jobs, up 17% from the same time last year.
But the most dramatic rise came from warehousing, which announced 47,878 cuts in October alone, reflecting a staggering 378% year-over-year increase.
Although not cited in the Challenger report, last month Amazon.com Inc. (NASDAQ:AMZN) announced plans to cut roughly 14,000 corporate jobs while doubling down on its AI spending.
Pandemic-era overcapacity and AI-powered automation appear to be driving the surge.
Other sectors under pressure include:
- Retail, with 88,664 job cuts this year, up 145%
- Consumer products, with 41,033 cuts, up 21%
- Services, up 62% to 63,580
- Media, up 26% to 16,680
The non-profit sector has also been heavily affected, with 27,651 job cuts this year—a 419% increase—driven by federal funding shortfalls linked to the so-called "DOGE Impact", a major reason behind this year's government-related job losses.
Hiring Hits 14-Year Low
While layoffs have surged, hiring plans are running dry. Employers have announced just 488,077 new hires so far in 2025, down 35% from the same period in 2024 and the lowest total since 2011.
Seasonal hiring has also slowed to a crawl. Only 372,520 seasonal positions have been announced through October this year, the weakest showing since Challenger began tracking in 2012.
"Unless there’s a surprise burst in November, we don't expect a strong seasonal hiring environment in 2025," Challenger said.
What This Means For The Fed And Markets
With labor market indicators pointing to a sharp deterioration—and official data still delayed due to the shutdown—the Federal Reserve faces increasing pressure to act.
Futures markets are pricing in a 70% chance of a rate cut in December, which would mark the third consecutive reduction.
For now, Wall Street is cheering the layoffs, viewing them as a path to higher margins and improved productivity through AI and automation.
But if job cuts persist and the labor market continues to weaken, today's cost savings could quickly turn into tomorrow's demand slump.
After all, if AI replaces the workers, who's left to buy the products?
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