Topline
Job cuts in the U.S. plummeted in February after the worst start to the year for layoffs since the recession, according to a report Thursday from the consulting firm Challenger, Gray & Christmas, which said layoffs may increase as the Iran conflict broadens.
Key Facts
Layoffs totaled 48,307 in February, down 72% from the more than 172,000 announced during the same month last year and down 55% from the 108,435 in January, the most in the month since 2009, Challenger, Gray & Christmas reported.
Andy Challenger, workplace expert and chief revenue officer for Challenger, Gray & Christmas, said the decline in February marked a “nice reprieve” from January’s total, but with U.S. involvement in a “growing” conflict in Iran, layoff plans may increase as companies “tighten belts amid uncertainty and higher costs.”
Hiring plans increased 140% in February to 12,755 from roughly 5,300 in January, though hiring has slowed 63% from the same month last year.
Economic and market conditions are the leading causes of layoffs this year, totaling more than 38,500 so far, followed by contract loss (31,416), restructuring (29,190) and closings (23,474), according to the consulting firm.
Companies referenced AI for just under 4,700 job cuts in February and more than 12,000 so far this year, after nearly 55,000 AI-related layoffs last year.
Which Industries Cut The Most Jobs?
Tech headlined job cuts in February with 11,039 layoffs, totaling 33,330 this year, a 51% increase for the sector from the same period last year. Challenger said that while AI is the “big story,” the sector is addressing global regulatory concerns, a slowdown in digital advertising driven by tariffs, economic uncertainty, and higher costs of hiring workers. Education totaled the second-most job cuts in the month at 5,417, followed by industrial manufacturing (4,109) and transportation, which announced the second-most job cuts this year with 31,702. The consulting firm said the conflict in Iran will likely affect transportation firms as oil prices rise and supply chains are disrupted.
What To Watch For
How many nonfarm jobs the U.S. add in February. The Bureau of Labor Statistics will report broader employment statistics on Friday, with consensus analyst estimates of 60,000 added jobs as the unemployment rate is expected to settle at 4.3%, according to FactSet. Private-sector employers added more payrolls than expected last month, adding 63,000 in the largest single-month increase since July 2025.
Key Background
Recent labor market reports pointed to a turnaround from last year, despite a surge in layoffs in January. Job growth in 2025 was reduced to 181,000 in February, down from the originally reported 584,000 after some economists anticipated near-zero growth for the year and in January. Federal data was also adjusted to show that employment for the 12 months ending March 2025 was cut by 898,000, adding to expectations of a slowdown in the job market. The Bureau of Labor Statistics reported the U.S. added 130,000 nonfarm jobs in January, exceeding Wall Street’s estimates of 75,000, as the unemployment rate dropped slightly to 4.3% from 4.4%. Fed Chair Jerome Powell previously warned labor data has been “distorted,” claiming federal data overestimated new jobs by as many as 60,000 a month last year.
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