By Harshit
NEW YORK, JANUARY 8, 2026 —
Announced layoffs in the United States fell sharply in December, reaching their lowest level in nearly a year and a half—a potential sign that the labor market is beginning to stabilize after a turbulent 2025.
According to a report released Thursday by Challenger, Gray & Christmas, U.S. employers announced 35,553 planned job cuts in December, a 50% decline from November and an 8% decrease from the same month a year earlier. It marked the lowest monthly total since July 2024.
December is traditionally a slower month for workforce restructuring, but analysts say the magnitude of the drop—combined with rising hiring plans—suggests conditions may be leveling out following a year marked by elevated job cuts.
A Pause After a Volatile Year
While December’s figures offered some relief, they followed a year of unusually heavy layoff activity.
For all of 2025, employers announced more than 1.2 million job cuts, up 58% from 2024 and the highest annual total since the pandemic-driven layoffs of 2020. Even with the year-end slowdown, the fourth quarter of 2025 was the worst Q4 for layoff announcements since 2008.
Andy Challenger, workplace expert and chief revenue officer at Challenger, Gray & Christmas, said the December decline is encouraging but should be viewed in context.
“While December is typically slow, this coupled with higher hiring plans is a positive sign after a year of high job-cutting plans,” Challenger said.
Hiring Plans Show Modest Improvement
Alongside fewer announced layoffs, companies also reported plans to hire 10,496 workers in December, up nearly 16% from November and 31% from a year earlier, according to the Challenger report.
Though still modest by historical standards, the increase in hiring intentions suggests employers may be moving from aggressive cost-cutting toward cautious workforce maintenance as economic uncertainty eases.
Disconnect With Government Data
Despite the surge in announced layoffs earlier in the year, official labor market data has remained relatively steady.
Weekly initial jobless claims have stayed broadly stable through most of 2025, with only intermittent spikes. At the same time, hiring momentum has been weak rather than collapsing, with average monthly payroll growth of roughly 55,000 jobs over recent months.
Economists expect December payroll growth of about 73,000 jobs, according to the Dow Jones consensus, when the government releases its employment report on Friday. That data from the Bureau of Labor Statistics will provide a clearer picture of whether the slowdown in layoffs is translating into broader labor market stability.
What It Means for 2026
The sharp drop in December layoff announcements does not signal a return to a tight labor market, but it may indicate that the most aggressive phase of corporate workforce reductions has passed.
Companies remain cautious amid slower economic growth, higher borrowing costs, and ongoing automation, but the data suggests many firms are opting to pause further cuts rather than escalate them.
As 2026 begins, the labor market appears to be entering a phase of low hiring and low firing—stable, but subdued—reflecting an economy that is cooling without tipping into recession.