AI, Mergers Fuel 16 Percent Jump in Layoffs Last Month

Planned layoffs by U.S. employers surged in May, driven by the ongoing artificial intelligence (AI) boom and mergers and acquisitions.

Companies announced 97,006 job cuts last month, representing a 16 percent increase from April’s 83,387 layoffs, according to new data from global outplacement firm Challenger, Gray and Christmas, released on June 4.

This is also up 3 percent from a year ago, when 93,816 planned job cuts were announced.

May’s tally marked the highest for the month since 2020 and the largest reading since January.

AI was the top factor for the job cuts, the firm noted, as the technology sector reported more than 38,000 job cuts—the highest monthly total since August 2024.

“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,” Andy Challenger, the group’s chief revenue officer, said in a news release.

“Technology, already the year’s biggest job cutter, saw its steepest month of cuts since early 2023, even as it remains the sector with the most hiring plans this year,” Challenger said.

But while AI has yet to cause widespread job cuts, the data show that companies are embracing AI to make their operations more productive, he added.

Transportation, meanwhile, experienced nearly 7,000 job cuts, bringing the year-to-date total to 40,338. Transportation, surging 449 percent from the same period a year ago, is the second-leading sector for layoffs this year.

Healthcare and product manufacturers, including hospitals, have also announced more than 30,000 cuts this year, up 17 percent from 2025.

AI is not the only contributing factor to job cuts.

“On top of the headline AI story, we’re seeing a sharp rise in cuts tied to acquisitions and mergers and a jump in bankruptcy-related losses, which tells me companies are restructuring aggressively as they reposition for an AI-driven economy,” Challenger said.

Economic conditions and closings were other cited reasons by employers.

Cory Stahle, labor economist at Indeed, noted that AI adoption has been concentrated among large employers. He estimated that about half of the top 1 percent of businesses posting on the website have incorporated artificial intelligence into their operations.

“If AI is going to bend the shape of hiring, it will likely show up at the top of the scale well before it reaches the small and midsize firms that do most of the actual hiring,” Stahle said in a June 2 note.

“The nation’s employment giants aren’t carrying the market today, but they may be sketching its next chapter.”

Despite the third consecutive monthly increase, overall layoffs are lower than last year.

Year-to-date, almost 398,000 cuts have been announced, down 43 percent compared to the same five-month period in 2025.

Hiring Plans

A trove of recent data indicates that the labor market is enjoying hiring momentum heading into the summer.

U.S. employers announced 19,536 planned hires in May, up 92 percent from the previous month.

In the first five months of 2026, there have been 80,472 planned hires, little changed from the same period last year.

Technology topped the list, with 11,250 announced positions. This is followed by electronics (3,158), insurance (1,435), and energy (800).

Employment conditions have been improving since the volatility recorded earlier this year, as labor demand rebounds.

Job openings climbed by 731,000 to a higher-than-expected 7.618 million in April, the highest since November 2024, according to the Bureau of Labor Statistics.

The largest gain was in professional and business services, where the sector added 668,000 vacancies. The substantial gain helped curb fears that AI would wipe out white-collar employment.

Additionally, payroll processor ADP reported that private-sector employment ballooned by 122,000 positions in May, topping expectations and higher than April’s total of 105,000.

Indeed’s Job Postings Index is also between 2 and 5 percent above pre-pandemic levels.

“Job growth has picked up from 2025 and is running at a moderate pace,” Bill Adams, chief U.S. economist at Fifth Third Commercial Bank, told The Epoch Times in an emailed note.

The economy continues to benefit from various tailwinds, including fiscal policy, the AI boom, and the unwind of last year’s policy uncertainties, he added. This is also helping offset headwinds from the war in Iran, approaching its 15th week.