US labor market's 'no hiring, no firing' state persists: September layoffs lowest for the month in four years, hiring intentions fall back to 2011 levels.

US corporate layoff plans fell to a four-year low for the same period, but hiring plans simultaneously retreated to 2011 levels a report released Thursday further illustrates the labor market's "no firing, no hiring" state. According to data from outplacement and executive coaching firm Challenger, Gray & Christmas, US employers announced 43,281 job cuts last month, down nearly 20% from a year earlier and the lowest for any September since 2022. That figure was down 18% from 52,881 in August. Over a longer horizon, companies announced a cumulative 573,195 job cuts in the first nine months of this year, down 39% from 946,426 in the same period of 2025 a 15% decline excluding government positions; the third quarter totaled 129,591, down 43% from 226,242 in the second quarter. The hiring side presents an entirely different picture. Employers announced plans to hire 90,787 people in September, far above the 12,325 in August but down 23% from 117,313 in September last year, making it the weakest September since 2011. On Challenger's basis, hiring plans for the first nine months of this year totaled 210,612, just 3% above the 204,939 in the same period last year. "Companies are in a wait-and-see period right now. Employers are facing high energy costs, an uncertain war with Iran, interest rate hikes that could make hiring more expensive, plus medical costs that are likely to rise sharply," Andy Challenger, the firm's chief revenue officer, said in a press release. "Layoff activity has indeed been slowing this year, and the September data continues to illustrate that." Fewer layoffs, even fewer hires: a low-churn market The top reason for layoffs in September was market and economic conditions, corresponding to 8,789 positions. Seasonal hiring is supposed to kick off in September, but this year's pace was notably insufficient: of the 90,787 hiring plans, retail accounted for 65,150 (about 70%), mainly from Halloween pop-up chain Spirit Halloween and crafts retailer Michaels, which together announced 62,000 hires this year, below nearly 101,000 last year. The combination of low layoffs and weak hiring also shows up in finer indicators. According to the Bureau of Labor Statistics, initial jobless claims fell to 197,000 in the week ending September 19, near a multi-decade low, indicating companies have yet to launch large-scale layoffs; August JOLTS job openings fell by 256,000 to 7.079 million, with 1.01 openings per unemployed person, below 1.06 in July. In other words, job opportunities are shrinking, but those employed are not being pushed out en masse what the labor market has lost is liquidity, not volume. Consumers feel worse about it. According to a Conference Board survey released Tuesday, US consumer confidence fell in September to a nearly twelve-and-a-half-year low. "Hiring plans are up year over year, but we haven't seen the surge in hiring plans that the holiday season should bring, which shows companies are being very cautious," Challenger said. Tech bucks the trend, and AI becomes the top reason for layoffs this year The overall cooling in layoffs has not covered all industries. The tech industry announced 10,799 job cuts in September, up 77% from 6,103 in August, the most of any sector that month; food ranked second with 7,326, and services with 3,306. Tech has announced a cumulative 165,925 job cuts so far this year, accounting for 29% of all layoff announcements, higher than any other industry. More noteworthy is the shift in the structure of reasons. According to Challenger data, layoffs explicitly attributed by companies to artificial intelligence from January to August this year reached 116,175, about 22% of all layoff announcements in the same period, more than double the 54,836 for all of 2025 and about nine times the 12,742 in 2024. AI-related layoffs peaked in May at 38,579 in a single month, or 40% of that month's total; they have since declined month by month, falling to 3,462 in August and dropping to fourth place among reasons, with restructuring returning to the top. But extending the timeline through September, AI remains the most-cited reason for layoffs this year, accounting for about 21% of all planned layoffs which is precisely the report conclusion cited in our original article. The structural side of employment data echoes this. According to August nonfarm payroll data, information industry employment fell by 23,000 month over month and financial industry employment by 11,000; the former has declined continuously since November 2022 and the latter since May 2025, both attributed by the agency to the AI shock; meanwhile, goods-producing sectors added jobs for a sixth consecutive month, which may reflect hiring demand from data center construction. What AI changes is not the total volume of layoffs, but who gets laid off. Employment resilience and sticky inflation: how much room does the Fed have left to hike The report matters because it lands just after the Fed's September rate hike. The Fed raised its benchmark rate this month to a range of 3.75% to 4.00%, its first hike in three years, and signaled that borrowing costs could continue rising in the coming months. The premise for hiking is precisely that the labor market does not deteriorate rapidly. The employment side still has its footing. According to the Bureau of Labor Statistics, August nonfarm payrolls rose by 162,000, the largest gain in five months and significantly above market expectations of about 56,000; June and July were revised up by a combined 55,000. The unemployment rate held at 4.1% for a third consecutive month, the labor force participation rate rebounded from 61.4% to 61.6%, and average hourly earnings rose 3.1% year over year. According to a survey of economists, September nonfarm payrolls are expected to rise by 90,000 (some institutions see 100,000, while Bank of America sees only 60,000), with the unemployment rate expected to hold at 4.1%; ADP data released Wednesday showed private-sector employment rose by 90,000 in September, also above expectations. The inflation side has shown signs of loosening in the past two days. According to data released by the Commerce Department's Bureau of Economic Analysis (BEA) on September 30, the August personal consumption expenditures (PCE) price index rose 3.4% year over year, below market expectations of 3.7%, while the July figure was simultaneously revised down from 3.7% to 3.4%; core PCE, excluding food and energy, rose 3.0% year over year, with the July figure revised down from 3.3% to 3.0%. The BEA also adjusted its price calculation methods for software and accessories, portfolio management fees, and legal services over the same period, with retroactive revisions back to 2021 the methodology adjustment alone revised core PCE down by about 36 basis points year over year, above economists' expectations of 20 to 30 basis points. Growth data was also revised up. According to final revised data, second-quarter US real GDP grew at an annualized rate of 2.2%, below 2.5% in the first quarter it should be noted that this 2.2% is the final figure after annual revisions, while the second reading on August 26 was 1.5%. Second-quarter personal consumption expenditures rose 3.8% quarter over quarter and nonresidential fixed investment rose 9%, with consumption and investment remaining the main drivers; the first estimate for third-quarter GDP will be released on October 29. After the data was published, market bets on an October rate hike clearly receded. According to the CME FedWatch tool, the probability of a hike at the October 27-28 meeting fell from 51.5% before the data release and 70% on Monday to a range of 35% to 40%. This change partly stemmed from comments by New York Fed President Williams on Tuesday he argued that after earlier policy tightening, there is "no urgency" for immediate further action. Fed officials and Wall Street signals But the Fed is not uniformly dovish internally. Chicago Fed President Goolsbee said inflation running above target for five and a half consecutive years is "playing with fire"; Governor Lisa Cook believes productivity gains will bring moderate inflation cooling, but the effect is not coming fast enough to offset broadening price pressures later this year; Governor Barr said high energy prices combined with a surge in AI-related investment have put the US "off track" in reaching its 2% inflation target. Institutional disagreements also center on the same point. Sal Guatieri, senior economist at BMO Capital Markets, believes the August price data, which was "not as scary as feared," may give the Fed time to wait for more data and hold steady in October, but with inflation still elevated and consumption and the economy still resilient, one more hike before year-end remains possible. Stephen Stanley, chief US economist at Santander US Capital Markets, cautioned that two months of data are not enough to constitute a trend, especially since the August monthly reading actually reaccelerated, "though there are at least some reasons to be slightly optimistic at a minimum, the Fed can afford to take its time, and perhaps may not need to hike much to guide inflation toward target." For investors, Challenger's remark remains the key to understanding this report: companies are not laying off, but they are not hiring either. This state is friendly to inflation it suppresses the momentum for wage and services price increases; but it also means that once a crack appears on the demand side, deterioration in employment data could come faster than in the past. In Friday's nonfarm payroll data, what the market wants to see is not whether it rises, but how big the gap is.