Labor Market and Economy Report: A Look at Trends in July 2025

Executive Summary

Job Growth

The U.S. economy added 73,000 jobs in July. Notable gains occurred in health care (+55,400) and social assistance (+17,900) while employment continued to decline in federal government (-12,000).

Revisions to May and June data were larger than usual, with combined employment now 258,000 lower than previously reported, pointing to much weaker hiring conditions than initially estimated.

Unemployment and Labor Force Participation

The unemployment rate increased slightly from 4.1% in June to 4.2% in July. The labor force participation rate declined from 62.3% to 62.2%.

Unemployment rates specific to the industries Aston Carter supports were as follows for July: finance and insurance (2.4%), professional and business services (3.4%), hospitals (1.4%), utilities (0.8%), manufacturing (3.8%) and construction (3.4%).

Among skilled labor categories Aston Carter sources talent for, unemployment in business and financial was 2.7% and office and administrative was 3.7%.

Inflation

The year-over-year inflation rate increased by 2.7% between July 2024 and July 2025, unchanged from the increase recorded in June. The Federal Reserve maintained its key interest rate in July, stating that “uncertainty about the economic outlook remains elevated.”

Wage Growth

Average hourly earnings increased by 3.9% for the 12 months ending July, slightly above June’s increase of 3.8%. “Real” average hourly earnings (wages adjusted for inflation) increased by 1.2% between July 2024 and July 2025. In other words, average hourly earnings are keeping up with inflation, but consumers may still be feeling the pressure of higher prices.