US Layoffs Are Slowing, But Companies Are Staying 'Cautious' on Hiring
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Job cuts slowed significantly in June, according to a report released Wednesday, bucking the trend of mass layoffs and government-sector redundancies that has defined the first half of 2025.
According to outplacement firm Challenger, Gray & Christmas (CGC), U.S.-based employers announced 47,999 job cuts last month, a 49 percent drop from the 93,816 in May. It also was 2 percent lower than the 48,786 announced the same month last year.
Why It Matters
The year has been marked by a surge in layoffs across the tech and retail sectors, as well as an unprecedented reduction in headcounts at government agencies driven by the Department of Government Efficiency (DOGE). While CGC's report shows that the trend may be slowing, other data released Wednesday point to sustained difficulties for the U.S. labor market.
People line up as they wait for the Mega JobNewsUSA South Florida Job Fair to open at Amerant Bank Arena on April 30, 2025, in Sunrise, Florida.
People line up as they wait for the Mega JobNewsUSA South Florida Job Fair to open at Amerant Bank Arena on April 30, 2025, in Sunrise, Florida.What To Know
According to CGC, the second quarter of 2025 saw 247,256 job cuts. Despite improvements in June, it still marks the highest total for the three-month period since 2020 at the height of the COVID-19 pandemic, when 1.2 million cuts were announced. It is also up 39 percent from the 177,391 announced in the second quarter of 2024, but less than half of the 497,052 announced last quarter.
Planned layoffs have totaled 744,308 this year, the highest first-half total since 2020, and rivaling the 896,675 announced in the first half of 2009 following the financial crisis.
June saw the continuation of government-sector job cuts, with 3,801 announced, up from 2,600 in May. That brings the total for the year to 288,628, many of which CGC attributes to the actions of DOGE. However, the firm noted that many remain in "legal limbo" because of court challenges to the department's cost-cutting efforts.
By sector, retail has led the private sector in terms of job cuts this year at 79,865, up 255 percent from the first half of 2024. The sector has long struggled as a result of declining foot traffic and the rise of e-commerce, and has more recently grappled with inflation, tariffs and the impact of both on consumer confidence and spending.
Announced planned hires dropped to 3,191 in June, CGC also found, the lowest monthly total this year and well below this year's monthly average of 13,822.
CGC's analysis coincides with the release of the ADP National Employment Report, a monthly measure of changes in private-sector employment in the U.S. It showed that private payrolls dropped by 33,000 jobs in June, following a downwardly revised increase of 29,000 in May. This was far below the consensus forecast of economists, who had penciled in an increase of 95,000, and marks the first decline since March 2023.
The drop was led by losses in the services sector, particularly in roles tied to professional and business services, as well as health and education. This was only partially offset by boosts to hiring on the goods-producing side.
What People Are Saying
Andrew Challenger, senior vice president at Challenger, Gray & Christmas: "The bulk of companies cited economic conditions last month. We saw some DOGE activity and have tracked over 2,000 jobs directly attributed to tariffs this year, but for the most part it was a quiet June.
"Hiring announcements in 2025 suggest a cautious but stabilizing labor market. While companies are clearly adding workers at a higher rate than in 2024, the restraint shown relative to previous years indicates continued uncertainty around costs, automation, and the broader economic outlook. Without a strong economic driver, hiring may remain measured through the rest of the year."
Dr. Nela Richardson, chief economist at ADP: "Though layoffs continue to be rare, a hesitancy to hire and a reluctance to replace departing workers led to job losses last month."
Bill Adams, chief economist for Comerica Bank, in comments shared with Newsweek: "Tariff hikes and policy uncertainty gave employers reason to be cautious toward hiring in the second quarter. The Israel-Iran war was a further reason to put hiring plans on hold in June.
"Hiring will likely stay slow in the second half of 2025. Ordinarily, job growth malingering at the second-quarter's sluggish pace for half a year would translate into a meaningful increase in the unemployment rate, which would pressure the Fed to cut rates this fall."
What Happens Next
The next key jobs data comes on Thursday morning, when the Bureau of Labor Statistics will release its nonfarm payrolls report for June. This is following a stronger-than-expected May that saw the addition of 139,000 jobs.
Analysts polled by TradingEconomics anticipate 100,000-job increase for June and for the U.S. unemployment rate to remain flat at 4.2 percent.
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