The overall labor market continued to lose momentum in July, with nonfarm payrolls falling by 23,000 and previous job gains revised sharply lower.

Although the unemployment rate edged lower to 4.1%, the decline reflected a smaller labor force rather than stronger hiring, as the labor force participation rate fell to its lowest level (61.4%) since early 2021.

Construction Jobs Rise in July, but Fall Year Over Year

Construction employment was a bright spot in July’s report from the Bureau of Labor Statistics. The overall construction sector added 22,000 jobs, following a gain of 5,000 in June.

Nonresidential construction accounted for most of the increase,
adding approximately 20,000 jobs. By comparison, residential
construction employment edged up by just 2,100 jobs, but it was the
first monthly gain in four months.

However, over the past year, residential construction employment has
fallen by 44,200 jobs. July marked the 17th consecutive month of
year-over-year decline. The industry’s six-month trend also remains
negative, with residential construction averaging a loss of
approximately 5,350 jobs per month.

The construction unemployment rate fell sharply to 4.6% in July, down
from 6.2% in June. A year earlier, the construction unemployment rate
stood at 4.2%. Despite the month-to-month volatility, the year-over-year
comparison still points to modestly softer conditions for the trades
than a year ago.

National Employment See Declines

July marked the seventh monthly job loss in the past 18 months. Payroll growth in May and June was also revised down by a combined 103,000 jobs.

Through July, monthly job growth has averaged just 61,000 jobs, down from 92,000 pace through June and well below the 122,000 monthly average in 2024.

Monthly Change in Payroll Employment and Unemployment Rate

Wage Growth Is Moderating

Average hourly earnings increased to $37.62. But the year-over-year rate of growth has cooled, slowing from 3.4% in June to 3.2% in July, which was the slowest pace of wage growth thus far in 2026.

Despite the slowdown, wage gains continue to outpace inflation, consistent with productivity-supported real wage growth.

For additional insights, including employment data for other industries, read this Eye On Housing article by Jing Fu, NAHB senior director of forecasting and analysis.