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American employers increased layoffs in May as artificial intelligence (AI) Outsourcing was the leading factor cited by companies cutting their workforce, new data shows.
Companies announced 97,006 termination of employment in May – up 16% from the 83,387 cuts in April and up 3% from the 93,816 cuts announced last May, according to the latest report by global coaching and training firm Challenger, Gray & Christmas.
AI was the top reason cited for job cuts for the third month in a row, with 38,579 cuts attributed to AI. It was the highest monthly total for the reason since Challenger began tracking it in 2023 and accounted for 40% of all job cuts announced in May.
“The labor market is being restructured by technology in real time. AI is now the leading reason that companies offer to reduce jobs and the main industry is technology,” said Andy Challenger, human resources and workplace expert and chief revenue officer of Challenger, Gray & Christmas.
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Layoffs jumped in May compared to April and were up modestly from a year ago, the report said. (Allison Joyce/Bloomberg via Getty Images)
I technology sector announced 38,242 job cuts in May – the highest number in the sector since August 2024. In 2026 so far, tech firms have announced 123,653 cuts, which is a 66% increase from the same period in 2025, and leads other sectors in job cuts this year by a wide margin.
“AI is not yet the jobpocalypse that some have predicted. Like spreadsheets and email before it, technology will eventually make workers more productive, but our data shows companies are already doing it, citing AI for more cuts than any other reason,” explains Challenger.
“The open question is not whether AI will replace the workforce, but how quickly,” he added.
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Companies are rethinking their workforce amid increased investment in AI and its implementation in business operations. (Pete Kiehart/Bloomberg via Getty Images)
I the transport sector announced a second round of job cuts in May with 6,909 cuts, bringing the 2026 figure to 40,388 and a 449% increase from the same period last year.
Utilities firms cut 6,268 jobs in May to bring the sector’s 2026 figure to 17,065 – a 61% drop from the same period last year.
Health care and manufacturers have also announced 30,414 job cuts so far this year, a 17% increase from the same period last year.
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AI was the top reason cited for layoffs for three consecutive months, the report said. (Stock)
Layoffs related to bankruptcy was the second reason cited for job cuts, which accounted for 5,637 in May. That’s the most bankruptcy-related layoffs since February 2025 when 35,172 were announced.
The market and economic conditions cited 69,645 cuts in 2026 so far, while closings accounted for 66,733 and mergers and acquisitions accounted for another 11,989 during that period. The number of job cuts linked to mergers and acquisitions increased sixfold from 1,889 caused by that reason during the same period last year.
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“In addition to the AI topic of the story, we are seeing a huge increase in tied cuts mergers and acquisitions and the jump in losses related to bankruptcy, which tells me that companies are restructuring aggressively as they reposition themselves for the AI-driven economy,” Challenger said.
