CEOs say they won't add many jobs in 2026. Is a low-hire, low-fire labor market the new norm?

By Jeffry Bartash

Jobless claims show most companies are avoiding big layoffs

Some companies are hiring, but finding a job is not easy these days.

The "low-hire, low-fire" labor market appears here to stay - at least in 2026. Most CEOs of U.S. companies say they have no plans to increase the size of their workforce this year.

The number of people being hired slowed sharply in 2026 to one of the lowest levels in more than a decade amid a burst of uncertainty triggered by high U.S. tariffs and the rapid evolvement of artificial intelligence as a potential labor-saving tool.

At the same time, most companies have refrained from widespread layoffs given a chronic shortage of skilled workers. Sales have also been strong enough to retain current staff.

Economists have called this a "low-hire, low-fire" job market. The latest weekly report on jobless claims bears out this trend.

Initial jobless claims rose by 4,000 to 212,000 in the seven days that ended Feb. 21, the government said. That's an exceedingly low level historically and reflects how few layoffs are taking place in the economy.

The bad news? The labor market is unlikely to see much improvement this year, based on a new survey of the CEOs of America's largest companies.

Fewer than one-third of business leaders say they plan to beef up their workforce anytime soon, the Conference Board reported Thursday. And some 41% say they plan to keep staff at current levels.

Only 28% say they might reduce employment, the nonprofit board said in its quarterly survey of CEOs.

The lack of layoffs has been a key driver of the five-year-old economic expansion. Most people who want a job have one, and their spending continues to propel the economy forward.

If bad times were coming, rising jobless claims would be one of the earliest warning signs.

Key details: The number of people already collecting unemployment benefits, known as continuing claims, fell by 31,000 to 1.83 million.

Remarkably, continuing claims are lower now than they were one year ago, a sign the labor market is no longer getting any worse.

These claims had risen steadily for several years and reached a high of almost 2 million last fall before tapering off.

"The labor-market data has been quite a bit better recently," Federal Reserve governor Stephen Miran said Thursday on Fox Business.

Big picture: Barring a recession, the U.S. job market probably can't get much worse after a rough 2025. The U.S. only added 181,000 new jobs last year, the smallest increase in any year the economy was not in recession since 2003.

The bright side?

CEOs are more optimistic about the economy, and a majority expect their businesses will improve in the next six months. If the economy accelerates, it would likely lead to more hiring than expected.

Looking ahead: "There is no sign of layoffs picking up. Hiring remains anemic, but the labor market is not getting worse and is showing many signs of stabilizing," said Heather Long, chief economist at Navy Federal Credit Union.

Market reaction: The Dow Jones Industrial Average DJIA and S&P 500 SPX were set to rise slightly in Thursday trading.

-Jeffry Bartash

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

02-26-26 0942ET