The labor market in the United States is increasingly challenging, with a decline in demand for workers and job postings reaching their lowest levels since the pandemic. Recent figures, published on Thursday, indicated that the estimated number of job openings declined to 6.54 million by the end of December, marking the lowest level since September 2020. The rates of hiring, quits, and layoffs remained largely unchanged. The most recent report, in conjunction with other labor market data published this week, has offered additional evidence that the “low-hire, low-fire” trend persists. According to Elizabeth Renter, there are still “slim pickings” for job seekers. “Job openings can be thought of as forward-looking; rather than an action that an employer has already taken, openings signal what they’re hoping (or not hoping) to do soon,” Renter wrote in commentary issued Thursday. “A decline in job openings for December may reflect employer apprehension regarding the upcoming year.” The uncertainty and repercussions stemming from extensive policies enacted by the Trump administration, especially regarding tariffs and immigration, have significantly impacted hiring strategies, as observed by Heather Long have allocated their resources to exploring technologies such as artificial intelligence, she stated. “The hiring recession isn’t going to end anytime soon,” she stated. According to data, the US labor market experienced its weakest job growth outside of a recession since 2003 last year.
The official January jobs report is scheduled for release next Wednesday, a delay attributed to the recent federal shutdown. Nevertheless, preliminary labor market data published this week indicates that there was no significant shift in the labor conditions during the first month of 2026. In January, US private sector firms recorded an addition of merely 22,000 jobs, as per the most recent estimates provided by payroll firm ADP. January’s estimated job gains, the weakest in three months and the most disappointing for a January since the Covid-19 resurgence resulted in losses in 2021, were primarily influenced by continued hiring in the health care sector. On Thursday, a recent report indicated that employers in the United States revealed intentions to recruit 5,306 individuals. The total for January has reached an unprecedented low, as reported by Challenger, which has been monitoring hiring announcements since 2009. On Thursday, the number of first-time claims for unemployment benefits surged following a lackluster performance in January. During the week ending January 31, approximately 231,000 initial jobless claims were filed, reflecting an increase of 22,000 claims compared to the previous week, as reported. The most recent count represents an eight-week peak and follows a period during which filings, viewed as an indicator of layoff activity, remained near two-year lows.
However, it has been noted that the tepid January for claims was not indicative of a turnaround in the labor market. It was likely due to weaker holiday hiring leading to fewer layoffs in January, as noted by Samuel Tombs in a statement earlier this week. Mass layoffs announced last month by companies such as Amazon and UPS resulted in the most significant January for job cut notifications since the Great Recession, according to new data released Thursday. In January, employers in the United States disclosed 108,435 job cuts, representing a threefold increase from the layoff announcements made in December and more than double the figure recorded in January of the previous year, as reported by Challenger, Gray & Christmas in their latest monthly analysis. Challenger reported that this marks the highest tally of layoff announcements recorded in January since 2009. Approximately 40% of the layoff announcements in January are attributable to two companies: Amazon and UPS, which have disclosed intentions to reduce their workforce by 16,000 and 30,000 positions, respectively. During an earnings call last week, executives from UPS indicated that the company’s plans to reduce its workforce by up to 30,000 positions are linked to the gradual cessation of its delivery partnership with Amazon. The January layoff announcements monitored by Challenger were confined to five sectors: transportation, technology, health care and health products, chemicals, and finance, as detailed in the report.
“Generally, we see a high number of job cuts in the first quarter, but this is a high total for January,” stated Andy Challenger. “It indicates that a majority of these plans were established at the conclusion of 2025, suggesting that employers harbor a lack of optimism regarding the prospects for 2026.” The primary factors identified for the planned reductions this month include contract loss, totaling 30,784, predominantly linked to UPS. This is followed by market and economic conditions at 28,392, restructuring at 20,044, and closures at 12,738, as detailed in the report. In January, artificial intelligence was responsible for 7,624 job cuts, while tariffs accounted for 294 cuts in the previous month, following their attribution for 7,908 announced cuts in 2025, as reported. “It is challenging to quantify the extent of AI’s influence on layoffs in particular,” he stated. “It is evident that leaders are engaging in discussions surrounding AI, a significant number of companies are eager to integrate it into their operations, and the market seems to favor companies that reference it.” It is crucial to recognize that Challenger’s monthly report records layoff intentions, indicating that the actual job losses may not materialize for weeks or months, and the extent of those job reductions could be less significant than initially projected. Equities continued to decline following the release of the economic data. The Dow experienced a decline of 637 points, representing a decrease of 1.29%. The S&P 500 experienced a decline of 1.37%, while the Nasdaq Composite, which is heavily weighted towards technology, saw a decrease of 1.74%.