Employers are hiring less but paying more
Private employment data suggests that the labor market might be tighter than the headline hiring numbers alone suggest, with worker pay accelerating alongside lackluster jobs growth. Why it matters: Employers are pulling back on hiring as they navigate an uncertain economic outlook, but supply constraints continue to limit the pool of available workers in some industries. That's helping speed up…
Employers are hiring less in July, with job growth slowing to just 44,000 new positions, according to private employment data. However, annual pay growth for workers who switched jobs accelerated to 7%, the highest pace since August 2025, while pay for those who remained with the same employer remained steady at 4.4%. The tighter labor market is being driven by supply constraints, particularly in sectors such as construction and healthcare.
Construction added only 1,000 jobs in July, but pay for construction workers changing jobs reached a record high due to strong demand from AI-related data center construction and a shortage of experienced labor. Education and healthcare led with 36,000 new jobs, although wage growth remained elevated as employers competed for a limited pool of workers.
Despite the uneven labor market, some industries are experiencing tighter hiring conditions, with employers hesitant to add positions due to geopolitical uncertainty, tariffs, and a more cautious consumer. ADP's chief economist, Nela Richardson, noted that pay reflects a labor market that is either tightening or remaining flat, rather than loosening.
While pay growth signals a strong labor market, it may not necessarily indicate inflationary pressures, as productivity gains could offset the increase in wages.
Written by urgent.news from Axios's reporting — not their text. Machine-written — it may contain errors, so check the original before relying on it.
