Challenger Job Cuts Hit Highest August Level in 5 Years, Hiring Plans at Record Low

TradingKey - After Wednesday’s weaker-than-expected JOLTS job openings data, another employment report has painted a bleak picture of the U.S. labor market: Challenger August job cuts reached the highest level since 2020, while announced hiring plans hit the weakest level ever recorded for the month.

On September 4, Challenger, Gray & Christmas reported that:

• U.S. companies announced 14,940 new jobs in August — the lowest August figure since 2009, and the lowest on record for any August
• Announced layoffs surged from 62,075 in July to 85,980 in August, up 13% year-over-year — the highest August total since 2020

Excluding the impact of the pandemic, this is the highest August job cut level since the 2008 financial crisis, highlighting the significant challenges facing the U.S. labor market amid ongoing macroeconomic uncertainty.

Industry breakdown:

• Pharmaceutical sector: 19,112 layoffs, up 142% YoY
• Financial sector: 18,092 layoffs, up 27% YoY
• Technology sector: 12,988 layoffs

Andrew Challenger, Senior Vice President at Challenger, Gray & Christmas, wrote in the report:

“September is typically when we begin to see large seasonal hiring announcements, which foretell how retailers expect the holiday season to go. Coming off the lowest August on record for hiring plans, it may be a troubling sign.”

He added that After the impact of DOGE on the Federal Government, employers are citing economic and market factors as the driver of layoffs. We’ve also seen a spike in cuts due to operation or store closings and bankruptcies this year compared to last.

Ahead of Friday’s August nonfarm payrolls report, these two “soft” employment indicators this week reinforce the growing consensus that the U.S. labor market is weakening — further supporting expectations that the Fed will restart its rate-cutting cycle later this month.