Labor Market Cools While Construction Industry Faces Headwinds

The U.S. labor market lost momentum in June, with total nonfarm payroll employment rising by just 57,000 — the smallest gain since February's outright decline.

Through June, monthly payroll gains have averaged 92,000 in 2026. This compares with an average of just 10,000 per month in 2025 and 122,000 per month in 2024. Over the past 12 months, total nonfarm employment has grown by 506,000, a considerably slower pace of expansion than earlier in the cycle.

Monthly Change in Payroll Employment and Unemployment Rate

The unemployment rate edged down to 4.2% in June, essentially unchanged from a year ago (4.1%). However, the decline more accurately reflects a shrinking labor force rather than stronger hiring, as both overall and prime-age labor force participation fell notably last month.

By comparison, the unemployment rate for construction workers rose to 6.2% in June, up from 5.2% in May and 3.7% in April. June's unemployment rate was the industry's highest since July 2021.

Although employment in the overall construction sector increased by 11,000 jobs in June, residential construction employment declined by 8,600.

Over the past 12 months, residential construction has shed a net 48,800 jobs. However, the sector now employs nearly 1.3 million more workers than it did during its post-Great Recession low.

Total employment in the home building industry stood at 3.3 million in June. The bulk of the workforce comprises 2.4 million residential specialty trade contractors, while the remaining 916,000 workers are employed by builders and remodelers.

NAHB Senior Director of Forecasting and Analysis Jing Fu provides additional insights into the U.S. labor market, including wage growth and sector-specific job gains, in this Eye on Housing article.