U.S. Announced Layoffs Fall to 17-Month Low in December, Challenger Report Shows

Announced workforce reductions in the United States dropped sharply in December, reaching their lowest point since mid-2024, according to new data from outplacement firm Challenger, Gray & Christmas. The report, released Thursday, indicates that employers detailed plans for 35,553 job cuts last month, a 50 percent decline compared with November and an 8 percent decrease from December 2024.

December’s figure marks the smallest monthly total since July 2024 and closes a year in which large-scale layoffs dominated corporate headlines. While December often sees a seasonal slowdown in workforce adjustments, Challenger said the steep month-to-month decline, combined with a modest uptick in hiring intentions, could signal that labor-market conditions are stabilizing after an extended period of elevated layoff activity.

Full-Year Cuts Highest Since 2020

The improvement late in the year was not enough to offset heavy cuts announced earlier in 2025. For the full year, employers disclosed plans to eliminate more than 1.2 million positions, a 58 percent jump from 2024 and the highest annual total since the onset of the COVID-19 pandemic in 2020. Challenger noted that the fourth quarter of 2025 was the most severe for announced layoffs since 2008, underscoring the depth of restructuring efforts across multiple industries.

The consulting firm tracks employer announcements of planned workforce reductions, capturing a forward-looking perspective on hiring and firing decisions. Although not all announced cuts ultimately materialize, the figures provide an early indication of corporate sentiment and cost-cutting intentions.

Hiring Plans Edge Higher

Alongside the reduction in planned layoffs, companies signaled moderate interest in expanding headcounts. Organizations outlined intentions to hire 10,496 workers in December, up nearly 16 percent from November and 31 percent above the level recorded a year earlier. Even with the month-to-month improvement, the total remains low relative to historical averages, suggesting that employers are proceeding cautiously amid lingering economic uncertainty.

Divergence From Government Data

Despite the elevated layoff announcements in 2025, many of the cuts have yet to be reflected in official labor-market figures. Weekly initial claims for unemployment insurance, a proxy for real-time layoffs, have remained subdued for much of the year, dipping to 208,000 in the latest reporting period. The four-week moving average, which smooths out short-term volatility, is at its lowest level since April 27, 2024, according to the U.S. Department of Labor.

Hiring, however, has also been tepid. Monthly payroll gains have averaged roughly 55,000 over the course of 2025, well below the pace seen in the previous two years. Economists surveyed by Dow Jones expect the December employment report, scheduled for release Friday, to show nonfarm payroll growth of 73,000. A result in that range would reinforce the picture of a labor market that is adding jobs but at a markedly slower rate than earlier in the post-pandemic expansion.

Industry and Economic Context

Several sectors, including technology, finance and retail, led layoff totals during 2025 as companies adjusted staffing levels after periods of rapid growth. Higher borrowing costs, moderating consumer demand and efforts to boost efficiency contributed to the wave of cost-cutting. Challenger’s December data suggest those pressures may be easing, but analysts caution that geopolitical risks, freight disruptions and continued tight monetary policy could influence hiring decisions in 2026.

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Andy Challenger, senior vice president at Challenger, Gray & Christmas, said the combination of fewer announced job cuts and greater hiring plans signals a possible turning point. He emphasized that December is traditionally a slower month for layoff declarations, yet the scale of the drop—paired with fresh hiring announcements—provides a tentative indication that employers might be gaining confidence as they enter the new year.

What to Watch

Market participants will scrutinize Friday’s government employment report for confirmation of Challenger’s findings. Key metrics include payroll growth, the unemployment rate and labor-force participation. Analysts are also monitoring wage trends for clues about inflationary pressures and the potential trajectory of Federal Reserve policy.

In addition to the monthly jobs data, the trajectory of weekly jobless claims will remain a critical gauge of whether announced layoffs translate into actual separations. Should claims remain near current levels, it would suggest that many of the planned cuts are being absorbed through attrition, redeployment or rescinded notices.

For now, the sharp December drop in announced layoffs offers a measure of optimism after a year characterized by heightened job-cutting plans. Whether that optimism endures will depend on incoming economic data, corporate earnings and the broader investment climate as 2026 unfolds.

Crédito da imagem: Spencer Platt | Getty Images