July payrolls fell 23,000 and unemployment held at 4.1%, according to fresh Bureau of Labor Statistics (BLS) data, yet Challenger, Gray & Christmas found that employers announced just 33,429 job cuts, the lowest monthly total in two years. Hiring plans also jumped 47% from June to the highest July total since 2022. Those figures point in different directions, and the details underneath them show what kind of hiring is actually happening.

The ‘summer swoon’

According to Challenger’s report, layoffs hit tech the hardest, with 149,023 cuts announced through July. Transportation, health care/products, services and government round out the top industries making cuts last month. Eighteen of the 30 industries Challenger tracks have announced fewer cuts than they did this time last year, with government slowing the most, followed by retail and warehousing.

Local government jobs were the main drag, says Andrew Flowers, chief economist at recruitment marketing platform Appcast. He says these jobs declined by 50,000, which could be due to “seasonal distortions” as educators are largely out of work for the summer.

“Leisure and hospitality have been at the epicenter of the summer swoon, losing over 80,000 jobs in June and July alone,” says Flowers. “And healthcare, long the stalwart industry of the job market, posted a lackluster gain of 22,000 in July, which is far below its average over the last year.” He says this was driven by a decline in hospital hiring, which could be related to “looming” Medicaid cuts.

The role of AI

“The ambiguous nature of what constitutes AI-attributed cuts was highlighted in July,” wrote Andy Challenger, workplace expert and chief revenue officer for Challenger, Gray & Christmas. “On the straightforward side, Visa announced a 7% reduction and attributed it to an efficiency push in which AI would reshape work.”

Dimitri Boylan, CEO of recruiting and talent management platform Avature, wrote in an email to HR Executive that those numbers fit what he’s seeing to a degree. “AI is reshaping work, especially in tech, and companies are reorganizing around that,” he wrote. “But I would be careful about taking every AI-attributed cut at face value. In many cases, ‘AI’ is becoming shorthand for a broader efficiency story that investors want to hear.”

Who is hiring?

Employers are hiring more than they were at this point last year, Challenger said, noting this “bucks the trend” occurring since 2020. “The demand is showing up in aerospace, energy and manufacturing, work that happens on a floor rather than a screen,” he added.

“What’s becoming clear is that demand is being redirected, not disappearing,” says Ger Doyle, regional president, North America at workforce solutions firm ManpowerGroup, in an email to HR Executive. “We’re entering a labor market where opportunity is increasingly concentrated around specific skills, industries and investments. Where demand exists is becoming just as important as how much demand exists.”

Bekir Atahan, VP of data/AI center of excellence at Experis (part of ManpowerGroup), says that he and his team are picking up on changes in entry-level hiring, particularly in technology roles that have traditionally required a four-year degree.

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