AI remains top reason for US job cuts for third straight month as employers axed 97,000 workers in May

UBS managing director and senior portfolio manager Jason Katz joins Varney & Co. to discuss the rotation and rally in the markets and his concern over the Feds next move regarding rates.

U.S. employers ramped up layoffs in May as theartificial intelligence (AI)rollout was the leading factor cited by companies cutting their workforces. new data shows.

Companies announced 97,006job cutsin May – an increase of 16% from the 83,387 cuts in April. an increase of 3% from the 93,816 cuts announced last May, according to a recent report by global outplacement and executive coaching firm Challenger, Gray & Christmas.

AI was the leading reason cited for job cuts for the third consecutive month, with 38,579 cuts attributed to AI. It's the highest monthly total for the reason since Challenger began tracking it in 2023. accounted for 40% of all the job cuts announced in May.

"The labor market is being reshaped by technology in real time. AI is now the leading reason companies give for cutting jobs. the primary industry citing it is technology," said Andy Challenger, labor and workplace expert and chief revenue officer of Challenger, Gray & Christmas.

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Layoffs jumped in May compared with April. are up modestly from last year, the report found.(Allison Joyce/Bloomberg via Getty Images)

Thetech sectorannounced 38,242 job cuts in May – the highest for the sector since August 2024. In 2026 so far, tech firms have announced 123,653 cuts, which is an increase of 66% from the same period in 2025,. it leads other sectors in job cuts this year by a wide margin.

"AI isn't yet the jobpocalypse some predicted. Like spreadsheets. email before it, the technology will ultimately make workers more productive, but our data shows companies are already acting on it, citing AI for more cuts than any other reason," Challenger explained.

"The open question isn't whether AI changes the workforce, but how fast," he added.

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Companies are reevaluating their workforces amid the surge of investment in AI. its implementation in corporate workflows.(Pete Kiehart/Bloomberg via Getty Images)

Thetransportation sectorannounced the second-most job cuts in May with 6,909 cuts, bringing the 2026 total to 40,388. an increase of 449% from the same period a year ago.

Services firms cut 6,268 jobs in May to bring the sector's 2026 total to 17,065 – a decrease of 61% from the same period last year.

Healthcareand products manufacturers have also announced 30,414 job cuts so far this year. which represents a 17% increase from the same period a year ago.

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AI has been the leading reason cited for layoffs for three straight months, the report found.(iStock)

Bankruptcy-related layoffswere the second-leading reason cited for job cuts, accounting for 5,637 in May. That's the most bankruptcy-linked layoffs since February 2025 when 35,172 were announced.

Market andeconomic conditionshave been cited for 69,645 cuts in 2026 so far, while closings accounted for 66,733. mergers and acquisitions were attributed to another 11,989 in that period. The number of job cuts linked to mergers. acquisitions is up more than six-fold from the 1,889 attributed to that reason in the same period last year.

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"On top of the headline AI story, we're seeing a sharp rise in cuts tied tomergers. acquisitionsand a jump in bankruptcy-related losses, which tells me companies are restructuring aggressively as they reposition for an AI-driven economy," Challenger said.

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