U.S. job growth slowed in July, with employers adding 73,000 positions—well below the 100,000+ forecasted by economists. In its July jobs report, the Bureau of Labor Statistics (BLS) also revised job gains for May and June downward by a combined 258,000, revealing that recent hiring momentum was much less robust than initially reported.BLS data also shows the national unemployment rate edged up to 4.2% last month, while the rate for college-educated professionals rose slightly to 2.7%. Although both figures remain historically low, the uptick signals a cooling labor market.More than that, these developments, taken together, suggest the U.S. labor market may be entering a new phase—moving from a period of broad, rapid expansion to one with a more measured pace of hiring. Many employers are already taking a more strategic approach to recruiting talent, focusing on roles that require specialized skills and support business or digital transformation.Read Robert Half’s coverage of the July jobs report.
Private education and health services powered most of July’s job gains, adding 79,000 positions. Healthcare, in particular, continues to serve as an employment engine in 2025, driven in part by ongoing workforce shortages—including for nonclinical roles.Other consumer-driven sectors contributed to the month’s growth as well, with retail trade (+15,700), financial activities (+15,000), and leisure and hospitality (+5,000) posting solid gains despite lingering economic uncertainty.Not all industries fared as well in July, though. For example, manufacturing saw a decline of 11,000 jobs, government payrolls shrank by 10,000 and wholesale trade shed 7,800 positions.Still, the demand for skilled talent remains elevated. According to Job Openings and Labor Turnover Survey (JOLTS) data from the BLS, the number of job openings dipped slightly to 7.4 million in June but remains well above pre-pandemic norms. The quits rate fell to 2.0%, suggesting workers may be more cautious about switching roles, but they’re not exiting the workforce altogether. (Robert Half’s research shows 73% of workers plan to stay in their current roles through the end of 2025.)The National Federation of Independent Business (NFIB) reports that 36% of small business owners had job openings they couldn’t staff in June—up two points from May. Additionally, 86% of those businesses hiring reported few or no qualified applicants.At the same time, research from Robert Half’s Demand for Skilled Talent report shows hiring plans remain strong across businesses of all sizes, suggesting that competition for top candidates may intensify even as overall job growth slows.
One of today’s most notable labor market trends isn’t about job growth, but how employers are evaluating talent. Increasingly, companies are embracing a skills-based hiring approach, placing more emphasis on a candidate’s potential and capabilities rather than on degrees or years of experience.By focusing on skills over credentials, employers are purposefully expanding their hiring options. They are also surfacing hidden gems in the labor market they might have otherwise overlooked—career changers, self-taught professionals, high-performing contractors and returning workers, including “boomerang” employees.This shift in approach also reflects what many businesses need from their workforce today, and for the future: a deep bench of adaptable professionals who can navigate new technologies, help streamline processes and contribute to AI-driven transformation.
Tips for employers: Speed and flexibility in hiring matter more than ever
Even with signs of cooling in the broader labor market, competition for top-tier talent hasn’t eased—especially in high-skill areas like technology, finance, human resources and legal. For employers, the mandate is clear: Stay nimble. These strategies can help:Streamline hiring—without compromising quality. Hiring timelines are stretching. In a recent Robert Half survey, 93% of managers said it now takes longer to hire then it did just two years ago. Long decision-making cycles can lead to lost candidates. To keep the process focused on candidate-friendly, employers should aim to tighten internal approvals, clarify role requirements from the outset and eliminate unnecessary interview rounds.Hire for adaptability in the age of AI. Artificial intelligence and machine learning are transforming workflows, but people still drive the outcomes. The most valuable hires are those professionals who can evolve with technology. Prioritize critical thinking, cross-functional fluency and learning agility alongside digital literacy when evaluating potential employees.Invest in the current workforce. Upskilling internal staff is a smart retention strategy—and a faster path to capability building for the business. Encourage lateral movement through stretch assignments, support formal learning programs, and prioritize succession planning. To understand what type of development opportunities workers seek, make a point to have career conversations with them regularly.Use contract talent strategically. When workloads spike or core staff hit a capacity wall, engaging interim professionals helps companies keep projects on track. This approach is also a practical way to test new roles, bring in niche expertise or keep up momentum during transitions—all without the lead time or long-term overhead of a full-time hire. Done right, this flexible staffing strategy is less about bridging gaps in the workforce and more about keeping the whole organization agile.Add highly skilled contract talent to your workforce fast—with help from Robert Half. Learn more.
Tips for job seekers: Lean into learning and keep an open mind about work opportunities
The pace of hiring has eased, but opportunities still abound, especially for skilled professionals who can demonstrate value and adapt quickly to change. Here’s how candidates can stay competitive and build momentum in their job search in the current labor market:Double down on future-forward skills. Now is the time to sharpen skill sets in areas like AI fluency, data literacy, process improvement and cross-functional teamwork. Improving soft skills like critical thinking and communication is also essential. Even in the most tech-enabled workplaces, these skills matter—a lot.Don’t rule out a return. Rehiring is a trend on the rise, and going back to a former employer can be a strategic career move. Rejoining the team can often mean faster onboarding and a clearer growth path. Knowing the company’s culture also reduces the time needed to adapt to the work environment.Stay visible—and stay curious. Even in a slow market, new roles are opening every day. Job seekers must keep their LinkedIn profiles current, let their professional network know they’re open to new opportunities and stay plugged into industry trends. A proactive, open mindset is one of the best assets job seekers can bring to the table.Say yes to contract work. Contract jobs offer more than just a paycheck. They allow professionals to expand their skill sets, explore different industries, and gain exposure to new tools and teams. Even better: These engagements can often lead to full-time offers.Explore new career avenues with help from Robert Half’s specialized recruiters.
Stay in the know about the latest labor market trends—with Robert Half
View Labor Market OverviewWant more data and insights on how the U.S. hiring environment is evolving in the second half of 2025? Visit Robert Half’s Labor Market Overview page to get a snapshot view of current hiring trends and access our expanded coverage on industries hiring, remote work statistics and trends, and more.
