July 2026 Labor Market Update

The U.S. labor market continued to slow in June compared to May, although overall conditions remain relatively stable. According to the U.S. Bureau of Labor Statistics’ (BLS) Employment Situation – June 2026 report, nonfarm payroll employment increased by 57,000 jobs, well below economists’ expectations and lower than the revised May total of 129,000 jobs. The unemployment rate declined slightly to 4.2%, but the decrease was largely attributable to a drop in labor force participation, which fell to 61.5%, its lowest level since March 2021. Economists attribute the lower participation rate to demographic trends, including an aging workforce, as well as the effects of changing immigration patterns, rather than a significant increase in workers giving up their job search.

Hiring continued to be concentrated in a limited number of sectors. Professional and business services led job gains, followed by social assistance and healthcare, while leisure and hospitality experienced notable reductions. In alignment with the BLS, the ADP National Employment Report also pointed to slower hiring in June, with private employers adding 98,000 jobs compared to 122,000 in May. Education and healthcare accounted for nearly half of all new private-sector jobs, while trade and transportation, along with financial services, also posted gains. Small businesses continued to drive overall hiring gains.

The latest BLS Job Openings and Labor Turnover Survey (JOLTS) reported that job openings held steady at 7.6 million in May, while hires, quits, and layoffs changed little. Layoffs remain historically low, and professionals are changing jobs less often than in recent years, a pattern that suggests employers remain cautious and are holding onto their existing workforce and adding headcount selectively. The Federal Reserve Bank of New York’s June Survey of Consumer Expectations paints a similar picture. Although hiring activity has moderated, workers became slightly more optimistic about their employment prospects, reporting a lower perceived likelihood of job loss and greater confidence in their ability to find new employment if needed.

Our experience reflects these broader labor market conditions. Organizations are hiring more selectively, prioritizing roles that support strategic initiatives and seeking experienced professionals who can deliver results quickly as technology and business needs continue to evolve.