AI Responsible for 40% of US Job Cuts in May, Resulting in 97,000 Positions Eliminated
UBS managing director and senior portfolio manager Jason Katz joins Varney & Co. to discuss the rotation and rally in the markets and his concern over the Fed’s next move regarding rates.
In May, U.S. employers significantly increased layoffs, with the rollout of artificial intelligence (AI) being the primary reason cited for workforce reductions. New data reveals that companies announced a staggering 97,006 job cuts, marking a 16% rise from April’s 83,387 cuts and a 3% increase from the 93,816 cuts reported in May of the previous year. This information comes from a recent report by Challenger, Gray & Christmas, a global outplacement and executive coaching firm.
For the third consecutive month, AI was the leading cause of job cuts, with 38,579 layoffs attributed to this technology. This figure represents the highest monthly total since Challenger began tracking AI-related job cuts in 2023, accounting for 40% of all layoffs announced in May.
Andy Challenger, labor and workplace expert and chief revenue officer of Challenger, Gray & Christmas, stated, “The labor market is being reshaped by technology in real time. AI is now the leading reason companies give for cutting jobs, and the primary industry citing it is technology.”
US ECONOMY ADDED 172,000 JOBS IN MAY, BEATING EXPECTATIONS
Layoffs jumped in May compared with April and are up modestly from last year, the report found. (Allison Joyce/Bloomberg via Getty Images)
The tech sector alone announced 38,242 job cuts in May, the highest number for the sector since August 2024. In 2026, tech firms have reported a total of 123,653 cuts, reflecting a 66% increase from the same period in 2025, leading all sectors in job reductions this year.
Challenger noted, “AI isn’t yet the jobpocalypse some predicted. Like spreadsheets and email before it, the technology will ultimately make workers more productive, but our data shows companies are already acting on it, citing AI for more cuts than any other reason.” He added, “The open question isn’t whether AI changes the workforce, but how fast.”
WORKERS FACE GROWING ‘AUTOMATION ANXIETY’ AS TECH LAYOFFS SURGE, AI ADOPTION ACCELERATES
Companies are reevaluating their workforces amid the surge of investment in AI and its implementation in corporate workflows. (Pete Kiehart/Bloomberg via Getty Images)
The transportation sector followed closely, announcing 6,909 job cuts in May, bringing the total for 2026 to 40,388, which is a staggering 449% increase from the same period last year. Meanwhile, services firms cut 6,268 jobs in May, totaling 17,065 for the year—a 61% decrease from the previous year.
Additionally, healthcare and product manufacturers have reported 30,414 job cuts this year, reflecting a 17% increase from the same timeframe last year.
INFLATION IS SQUEEZING AMERICAN CONSUMERS AND THE FED’S LATEST REPORT SHOWS IT’S GETTING WORSE
AI has been the leading reason cited for layoffs for three straight months, the report found. (iStock)
Bankruptcy-related layoffs were the second-leading cause of job cuts, accounting for 5,637 layoffs in May—the highest number since February 2025, when 35,172 layoffs were reported. In 2026, market and economic conditions have led to 69,645 job cuts, while closures accounted for 66,733 and mergers and acquisitions contributed another 11,989 layoffs. Notably, the number of job cuts linked to mergers and acquisitions has surged more than six-fold compared to the same period last year.
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Challenger concluded, “On top of the headline AI story, we’re seeing a sharp rise in cuts tied to mergers and acquisitions and a jump in bankruptcy-related losses, which tells me companies are restructuring aggressively as they reposition for an AI-driven economy.”
UBS managing director and senior portfolio manager Jason Katz joins Varney & Co. to discuss the rotation and rally in the markets and his concern over the Fed’s next move regarding rates.
In May, U.S. employers significantly increased layoffs, with the rollout of artificial intelligence (AI) being the primary reason cited for workforce reductions. New data reveals that companies announced a staggering 97,006 job cuts, marking a 16% rise from April’s 83,387 cuts and a 3% increase from the 93,816 cuts reported in May of the previous year. This information comes from a recent report by Challenger, Gray & Christmas, a global outplacement and executive coaching firm.
For the third consecutive month, AI was the leading cause of job cuts, with 38,579 layoffs attributed to this technology. This figure represents the highest monthly total since Challenger began tracking AI-related job cuts in 2023, accounting for 40% of all layoffs announced in May.
Andy Challenger, labor and workplace expert and chief revenue officer of Challenger, Gray & Christmas, stated, “The labor market is being reshaped by technology in real time. AI is now the leading reason companies give for cutting jobs, and the primary industry citing it is technology.”
US ECONOMY ADDED 172,000 JOBS IN MAY, BEATING EXPECTATIONS
Layoffs jumped in May compared with April and are up modestly from last year, the report found. (Allison Joyce/Bloomberg via Getty Images)
The tech sector alone announced 38,242 job cuts in May, the highest number for the sector since August 2024. In 2026, tech firms have reported a total of 123,653 cuts, reflecting a 66% increase from the same period in 2025, leading all sectors in job reductions this year.
Challenger noted, “AI isn’t yet the jobpocalypse some predicted. Like spreadsheets and email before it, the technology will ultimately make workers more productive, but our data shows companies are already acting on it, citing AI for more cuts than any other reason.” He added, “The open question isn’t whether AI changes the workforce, but how fast.”
WORKERS FACE GROWING ‘AUTOMATION ANXIETY’ AS TECH LAYOFFS SURGE, AI ADOPTION ACCELERATES
Companies are reevaluating their workforces amid the surge of investment in AI and its implementation in corporate workflows. (Pete Kiehart/Bloomberg via Getty Images)
The transportation sector followed closely, announcing 6,909 job cuts in May, bringing the total for 2026 to 40,388, which is a staggering 449% increase from the same period last year. Meanwhile, services firms cut 6,268 jobs in May, totaling 17,065 for the year—a 61% decrease from the previous year.
Additionally, healthcare and product manufacturers have reported 30,414 job cuts this year, reflecting a 17% increase from the same timeframe last year.
INFLATION IS SQUEEZING AMERICAN CONSUMERS AND THE FED’S LATEST REPORT SHOWS IT’S GETTING WORSE
AI has been the leading reason cited for layoffs for three straight months, the report found. (iStock)
Bankruptcy-related layoffs were the second-leading cause of job cuts, accounting for 5,637 layoffs in May—the highest number since February 2025, when 35,172 layoffs were reported. In 2026, market and economic conditions have led to 69,645 job cuts, while closures accounted for 66,733 and mergers and acquisitions contributed another 11,989 layoffs. Notably, the number of job cuts linked to mergers and acquisitions has surged more than six-fold compared to the same period last year.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
Challenger concluded, “On top of the headline AI story, we’re seeing a sharp rise in cuts tied to mergers and acquisitions and a jump in bankruptcy-related losses, which tells me companies are restructuring aggressively as they reposition for an AI-driven economy.”
