Layoffs in October were the highest since 2003

Job cuts in the U.S. surged in October, with more than 153,000 layoffs, making it the highest number of October job reductions in over two decades, according to data from the staffing and outplacement firm Challenger, Gray & Christmas.

So far this year, employers have announced close to 1.1 million layoffs, the largest total by this point in the year since 2020, when pandemic shutdowns triggered a wave of unemployment.

The labor market has shifted markedly. The earlier period of “no hire, no fire”—when companies held on to workers even while slowing recruitment—has now turned into an environment where businesses are cutting expenses and trimming headcount, in part by adopting AI tools that reduce the need for human labor.

“October saw job cuts far above what is typical for that month,” said Andy Challenger, workplace analyst and chief revenue officer at Challenger, Gray & Christmas.

He also noted that some sectors are pulling back after over-hiring during the pandemic, and that the combination of AI deployment, weakening consumer and business spending, and higher costs is leading companies to restrict hiring and tighten budgets.

Federal Reserve Chair Jerome Powell has pointed to fading hiring momentum in recent months as one of the factors behind the two interest rate cuts delivered in September and October.

Meanwhile, the Department of Labor has paused its monthly employment reports due to the government shutdown that began on October 1, delaying September data and likely pushing back October's release as well.

Other indicators also point to a cooling labor market. Payroll firm ADP reported this week that private employers added jobs at a sluggish pace.

“People who are being laid off now are taking longer to find new work, which may further loosen labor conditions,” Challenger said.

The National Association for Business Economics expects the unemployment rate — 4.3% in August — to edge up to 4.5% by 2026, based on its latest forecast.