American employers have almost stopped firing people. That is not the same thing as hiring them.
Two labor market reports landed Thursday morning, one day before the July employment situation, and both told the same story from different angles: the risk of losing a job in this economy is unusually low, while the odds of landing a new one remain stubbornly ordinary.
Job Cuts Collapsed in July
Challenger, Gray & Christmas said U.S. employers announced 33,429 job cuts in July, down 27% from June and 46% below July 2025. It was the lowest monthly total in two years. Year to date, announced cuts are running 41% below the same stretch of 2025.
"The pace of layoffs fell dramatically this summer," said Andy Challenger, chief revenue officer at the firm. "Layoff plans continue to be announced primarily in tech, and artificial intelligence is still the story."
The AI attribution is not a throwaway line. Artificial intelligence led all stated reasons for job cuts for the fifth consecutive month, accounting for 10,970 of July's announcements. The technology sector alone is responsible for nearly a third of the 477,033 cuts announced across the economy so far this year.
Employers also announced 16,095 planned hires in July, a 47% increase and the strongest July for hiring plans since 2022 — though off a notably low base.
Claims Held Near Historic Lows
The Labor Department reported initial claims for state unemployment benefits rose 1,000 to a seasonally adjusted 199,000 for the week ended August 1. Economists polled by Reuters had expected 202,000.
Continuing claims, which track people still collecting benefits, rose 24,000 to 1.801 million for the week ended July 25. That divergence is the tell. Few people are entering unemployment, and the ones already there are taking longer to leave it — the "low-hire, low-fire" pattern that has defined this labor market for months.
Friday Is the Real Test
The Bureau of Labor Statistics releases the July jobs report at 8:30 a.m. ET Friday. Economists surveyed by Reuters expect 80,000 nonfarm payroll additions, up from June's 57,000, with the unemployment rate holding at 4.2%. Individual forecasts run wider, from roughly 85,000 to 130,000.
Wednesday's data argues for caution on the low end. ADP reported private payrolls grew just 44,000 in July, and the ISM services employment index fell back into contraction at 47.4.
The Fed Is Watching Prices, Not Jobs
None of this points where a soft labor market normally points. The Federal Reserve held its benchmark rate at 3.50%–3.75% last week, and three committee members dissented in favor of a quarter-point increase. Market-implied odds still put the probability of at least one hike before year-end above 60%.
A low-firing, low-hiring economy gives Chair Kevin Warsh's committee little reason to ease while input costs keep climbing.
Markets took it in stride. The Dow rose about 0.2% Thursday, extending its record run, while the S&P 500 hovered near flat and the Nasdaq slipped 0.3%. Gold climbed toward $4,300 an ounce for a fourth straight session, up nearly 6% on the week, as a partial Strait of Hormuz reopening deal pushed oil lower and softened the inflation outlook.
Sources: Challenger, Gray & Christmas (July 2026 Job Cuts Report), U.S. Department of Labor, Reuters, FXStreet, TheStreet, Trading Economics