In line with Challenger, job cuts in October reached the very best degree for the month in 22 years

The number of layoff announcements rose sharply in October as companies rebalanced their workforces amid the artificial intelligence boom, a sign of possible trouble ahead in the labor market, according to outplacement firm Challenger, Gray & Christmas.

Job cuts totaled 153,074 this month, up 183% from September and 175% more than the same month last year. That was the highest level since 2003 in October. This was the worst year for announced layoffs since 2009.

“Like 2003, disruptive technology is changing the landscape,” said Andy Challenger, workplace expert and the company’s chief revenue officer. “At a time when job creation is at its lowest level in years, the prospect of layoffs being announced in the fourth quarter is particularly dire.”

The report provides insight into the labor market at a time when the government has suspended data collection and publication during the shutdown in Washington, DC

To be sure, the monthly Challenger numbers can be very volatile, and an accelerated pace of layoffs is not yet evident in the weekly state-level jobless claims that continue to come in despite the shutdown. Payroll company ADP reported net job growth of 42,000 in October, offsetting two consecutive months of losses in the private sector.

However, the report comes as Federal Reserve officials have expressed concern about a slowdown in the labor market. The central bank has cut its key interest rate twice since September and is expected to approve another quarter-percentage point cut in December as policymakers try to forestall more serious problems.

Challenger reports the highest number of layoffs from the technology sector during a period of restructuring due to AI integration. Companies in the sector announced 33,281 cuts, nearly six times September levels.

Consumer goods also saw a sharp increase to 3,409, while nonprofits, an area hit hardest by the shutdown, saw 27,651 reductions year-to-date, a 419% increase from the same point in 2024.

In total, companies have announced 1.1 million cuts this year, a 65% increase from last year and the highest level since the Covid pandemic year of 2020. October saw the highest total of any fourth quarter month since 2008.

“Some industries are correcting after the pandemic hiring boom, but this is happening because AI adoption, weaker consumer and business spending and rising costs are leading to belt tightening and hiring freezes. Those now laid off will find it harder to find new jobs quickly, which could further loosen the labor market,” Challenger said.