The latest U.S. employment report points to a labor market that continues to cool, but the headline numbers do not tell the full story for employers.
According to the Bureau of Labor Statistics (BLS), total nonfarm payroll employment changed little in July, declining by 23,000 jobs, while the unemployment rate remained relatively stable at 4.1%. The report also included meaningful downward revisions to previous months: May employment growth was revised from 129,000 to 63,000 jobs, while June was revised from 57,000 to 20,000. Combined, employment gains for May and June were 103,000 lower than previously reported.
For employers, these numbers reinforce something Eastridge is seeing across the workforce landscape: national employment statistics are an important starting point, but hiring decisions increasingly require a much more localized and role-specific view of the labor market.
Organizations need to understand not only whether employment is growing nationally, but also where qualified talent is available, what competitors are paying, which skills remain difficult to find, and how quickly the talent market is changing in the cities where they operate.
Several indicators within the July report stand out for employers.
Payroll growth has slowed considerably. Total nonfarm payroll employment declined by 23,000 in July after averaging gains of just 34,000 per month during the previous 12 months. The downward revisions to May and June further suggest that hiring momentum has been softer than earlier estimates indicated.
Unemployment remains relatively low. The unemployment rate held at 4.1%, representing approximately 6.9 million unemployed people. Despite slower payroll growth, the unemployment rate has changed little over the past year.
Labor force participation has weakened. The labor force participation rate remained at 61.4% in July, but it has declined 0.7 percentage point since January. The employment-to-population ratio has also declined 0.5 percentage point during that period.
For employers, this distinction matters. Slower hiring does not necessarily mean greater access to talent if fewer people are participating in the workforce.
Wage pressure has moderated but has not disappeared. Average hourly earnings for private-sector workers reached $37.62 in July and increased 3.2% over the previous year.
That means employers should be cautious about interpreting slower job creation as an opportunity to significantly reduce compensation. For specialized, technical, skilled and difficult-to-fill positions, competitive pay remains an important part of the talent equation.
The July report also demonstrates why employers should look beneath national employment totals.
Healthcare continued to add jobs, increasing employment by 22,000 during the month, including an 18,000 increase in ambulatory health care services. Retail trade, meanwhile, lost 19,000 jobs, and financial activities continued to trend downward with a decline of 14,000 positions. Financial activities employment is now 121,000 below its May 2025 peak.
Employment changed little across several other industries, including construction, manufacturing, transportation and warehousing, professional and business services, information, leisure and hospitality, and wholesale trade.
Manufacturing provides another useful indicator. The average manufacturing workweek remained at 40.4 hours, while overtime declined slightly to 3.1 hours.
Together, these numbers describe a market in which employers are increasingly selective about adding headcount while maintaining existing operations.
For employers, one of the biggest risks in the current environment is assuming that slower national employment growth automatically makes recruiting easier.
The labor market is much more fragmented than a single national unemployment rate can show.
A company hiring skilled manufacturing workers in Phoenix may face a completely different talent environment than an organization looking for an engineering professional in Orange County, a life sciences candidate in San Diego, a technology professional in the Bay Area, or operational talent in Las Vegas.
That is why Eastridge believes national employment reports should be viewed alongside regional and occupational labor-market intelligence. The result is a more nuanced question than simply, "Is unemployment going up or down?"
Employers should be asking:
Those questions become even more important when labor-market conditions are changing.
“The July employment report reinforces the shift we’ve been watching toward a more cautious and selective hiring environment,” says Isabelle Parra, Market Insights and Hiring Strategy Specialist at Eastridge. “Slower payroll growth doesn’t necessarily mean employers suddenly have access to significantly larger pools of qualified candidates. Talent availability still depends heavily on the market, occupation, skill set, and compensation being offered.
“From a workforce planning perspective, the downward revisions to May and June are particularly important. They suggest hiring momentum has been softer than initially reported. At the same time, unemployment remains relatively low, and labor force participation has declined since the beginning of the year. Together, those trends can create an environment in which companies hire more carefully while still struggling to find talent for business-critical roles.
“I recently partnered with a client on a nationwide competitive market analysis for industrial and warehouse hiring across several geographic markets. Rather than looking at hiring conditions through a national lens, we mapped where the talent was actually available, identified the employers competing for the same skill sets in each location, and evaluated how total compensation, not just base pay, compared with the local market.
“What stood out was how different the story was from one market to the next. In some locations, compensation was the primary challenge. In others, the issue was competition from a handful of key employers or a limited supply of qualified talent. Those insights gave the client a much clearer understanding of where they were losing candidates, where they were already competitive, and where adjustments to their recruiting strategy could make the greatest impact. Just as importantly, the analysis provided them with data to inform their broader workforce planning before making significant changes.
“For employers, that’s the opportunity in today’s market. Rather than making broad workforce decisions based on the national unemployment rate, organizations can take a much more targeted approach by evaluating talent availability, compensation, competitive hiring activity, and local skill supply in the markets where they actually recruit. That level of market intelligence can help employers make more informed decisions about where to hire, when compensation or job requirements may need to change, and where flexible staffing can provide the agility needed to navigate a more cautious hiring environment.”
At Eastridge, we believe workforce data becomes most valuable when employers can translate it into specific hiring decisions.
Our Workforce Insight Guides combine labor-market intelligence with practical workforce analysis to help employers evaluate factors such as:
Eastridge's workforce insights are designed to give HR leaders, talent acquisition teams, hiring managers, and executives greater visibility into the markets where they compete for talent. This type of intelligence becomes particularly valuable in today's labor market. When employment growth is slowing, but unemployment remains relatively low, employers cannot rely on assumptions about candidate availability.
The July Employment Situation report does not indicate that hiring has stopped. It indicates that the labor market is becoming more measured. Employers appear to be operating in an environment characterized by slower overall job creation, relatively low unemployment, reduced labor force participation, moderate wage growth, and significant differences across industries.
For business leaders, that environment calls for a workforce strategy that is both disciplined and flexible. Companies should continue evaluating where permanent hiring is necessary, where temporary or contract talent can provide flexibility, whether compensation remains aligned with the market, and whether their recruiting expectations match the actual talent supply in the regions where they operate
The organizations positioned to compete most effectively will be those that move beyond national headlines and understand the labor market at the level where hiring actually happens: by market, industry, occupation and skill.
Source: U.S. Bureau of Labor Statistics: July 2026 Employment Situation, released August 7, 2026.