Construction Jobs Rise Amid Cooling Labor Market

The US labor market continued to lose momentum in July, with nonfarm payrolls falling by 23,000 and previous job gains revised sharply lower. The unemployment rate edged lower to 4.1%, but this decline was due to a smaller labor force rather than stronger hiring.

In fact, the labor force participation rate fell to its lowest level (61.4%) since early 2021. This trend is concerning, as it suggests that people are leaving the workforce or not entering it in the first place.

The Bureau of Labor Statistics reported that 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. As a result, through July, monthly job growth has averaged just 61,000 jobs, down from 92,000 pace through June.

However, there is one bright spot: the construction industry defied the broader trend and added 22,000 jobs in July, following a gain of 5,000 in June. Nonresidential construction accounted for most of this increase, adding approximately 20,000 jobs. Residential construction employment edged up by just 2,100 jobs, but it was the first monthly gain in four months.