September Job Cuts Fall 37% From August; YTD Total Highest Since 2020, Lowest YTD Hiring Since 2009

U.S. employers announced 54,064 job cuts in September, a 37% monthly decrease, yet year-to-date cuts for 2025 have reached 946,426, marking the highest level since 2020 and a 55% increase year-over-year, with projections to surpass 1 million. This surge is primarily driven by "DOGE Actions" in the Government sector (299,755 cuts) and broader market/economic conditions (208,227 cuts), alongside a 203% increase in Retail layoffs and 17,375 cuts explicitly attributed to AI in the Technology sector. Concurrently, year-to-date hiring plans have plummeted 58% to 204,939, the lowest since 2009, indicating a significantly cautious and stagnating labor market despite potential future rate cuts.

Analysis

While U.S. job cuts in September fell 37% month-over-month to 54,064, this figure masks a significantly deteriorating labor market outlook. The year-to-date total has reached 946,426 cuts, a 55% increase over the prior year and the highest level since 2020, with projections to exceed one million. This weakness is driven by a combination of factors: a substantial, one-off reduction of 299,755 federal jobs due to "DOGE Actions" primarily impacting the East region, and more systemic economic stress indicated by the 208,227 cuts attributed to market conditions. The retail sector shows acute distress with layoffs surging 203% year-over-year, reflecting severe caution ahead of the holiday season. Concurrently, the technology sector is undergoing a structural shift, with 17,375 job cuts explicitly blamed on artificial intelligence. The most concerning forward-looking indicator is the 58% collapse in year-to-date hiring plans, which have fallen to their lowest level since 2009, signaling that employers are aggressively pulling back on expansion and backfilling roles, a trend that outweighs the potential stabilizing effect of future rate cuts.

Key Decisions for Investors

• Investors should exercise caution with consumer discretionary sectors, particularly retail, given the 203% year-over-year increase in job cuts and exceptionally weak seasonal hiring plans, which signal a poor outlook for consumer spending.
• Look beyond the misleading headline monthly job cut number and focus on the severe year-to-date trend and the historic collapse in hiring intentions, as these are stronger indicators of a potential economic slowdown.
• Re-evaluate positions in the technology sector by differentiating between firms negatively impacted by cyclical trends versus those undergoing structural disruption from AI, as this is becoming a primary driver of layoffs and skill set changes.
• Assess portfolio exposure to government contractors and related industries, as the 299,755 layoffs attributed to federal "DOGE Actions" represent a significant fiscal headwind for dependent companies.