Job Cuts Jump in January as Hiring Plans Hit Record Low: Challenger Report

U.S. employers announced a sharp increase in planned layoffs in January while hiring plans fell to their lowest level on record for the month, signaling growing caution about the labor market at the start of 2026, according to a report released on Feb. 5 by Challenger, Gray & Christmas.

U.S.-based companies announced 108,435 job cuts in January, more than double the 49,795 cuts reported in the same month last year and up 205 percent from December’s total of 35,553, per the report. It marked the highest January job-cut figure since 2009, during the depths of the global financial crisis.

Challenger said the January total was also the largest monthly tally since October 2025, when employers announced more than 153,000 layoffs.

“Generally, we see a high number of job cuts in the first quarter, but this is a high total for January,” Andy Challenger, the firm’s workplace expert and chief revenue officer, said in a statement.

“It means most of these plans were set at the end of 2025, signaling employers are less-than-optimistic about the outlook for 2026.”

Transportation, Technology Lead Cuts

Transportation companies led all sectors with 31,243 announced job cuts in January, largely driven by United Parcel Service’s plan to eliminate about 30,000 positions as it winds down its delivery partnership with Amazon.

The technology sector followed with 22,291 announced cuts, with Amazon accounting for the bulk of the total as it restructures management layers. The reductions appear tied more to organizational streamlining than to direct displacement driven by corporate adoption of artificial intelligence.

“CEO Andy Jassy, like many CEOs recently, has said AI will cost jobs in the coming years, but this cut appears to be due more to over-hiring and reducing layers than to the new technology,” Challenger said.

Health care providers and health products manufacturers announced 17,107 job cuts, the highest monthly total for the sector since April 2020, as hospitals and medical systems grapple with inflation, high labor costs, and lower reimbursements from government programs.

“These pressures are leading to job cuts, as well as other cutting measures, such as some pay and benefits,” said Challenger.

Chemical manufacturers reported 4,701 cuts, primarily from a single announcement by Dow Inc., which cited increased use of automation and artificial intelligence and said it would “adopt new ways of working.”

Contract Loss, Economic Conditions Drive Layoffs

The Challenger report also showed that contract losses were the primary driver of the January layoffs, accounting for 30,784 job cuts. Market and economic conditions led to 28,392 cuts, while restructuring accounted for more than 20,000 planned layoffs.

Artificial intelligence accounted for 7,624 job cuts, representing about 7 percent of the month’s total. Since Challenger began tracking AI-related layoffs in 2023, the company said such references have accounted for roughly 3 percent of all announced job cuts.

“It’s difficult to say how big an impact AI is having on layoffs specifically,” Challenger said. “We know leaders are talking about AI, many companies want to implement it in operations, and the market appears to be rewarding companies that mention it.”

Tariffs were cited for a relatively small number of layoffs in January, with fewer than 300 job cuts linked to trade policy.

Hiring Plans Sink to Record Low

At the same time, employers announced just 5,306 hiring plans in January, the lowest monthly total since Challenger began tracking hiring intentions in 2009.

The figure was down 13 percent from January 2025 and nearly 50 percent lower than December’s hiring plans, underscoring what some economists have described as a “low-hire, low-fire” environment, where U.S. employers may be wary of expanding payrolls due to economic outlook uncertainty, while also being reluctant to lay off workers due to a shrinking labor pool.

The Challenger report adds to signs of cooling labor demand after recent payroll data showed private-sector job growth slowing at the start of the year.

America’s private-sector employers added 22,000 jobs in January, down from a downwardly revised 37,000 in December 2025, payroll processor ADP announced in its latest National Employment Report, released on Feb. 4.