Construction Employment Rises Amid a Cooling Labor Market

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.

National Employment See Declines

According to the Bureau of Labor Statistics, 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.

Construction Industry Defies the Broader Trend

Construction employment was a bright spot in the July report. The 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.

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.