Policy crosswinds are now in the jobs data. July’s Employment Situation points to a labor market cooling under the weight of new tariffs and stepped‑up worksite enforcement, particularly in manufacturing and construction. At the same time, the headline numbers matter. The U.S. added 73,000 jobs last month, and the unemployment rate ticked up to 4.2%. Average hourly earnings rose 0.3% (3.9% year over year) and the average workweek increased to 34.3 hours. But the bigger story is the revisions: BLS cut a combined 258,000 jobs from May and June, recasting the summer trend from cooling to something closer to stalling.
A sector‑by‑sector look shows that manufacturing lost jobs and construction was essentially flat. By contrast, hiring grew in health care (+55,000) and social assistance (+18,000), while the federal government shed 12,000 jobs and is now down roughly 84,000 since January. Most other major sectors were little changed. That goods‑producing softness, alongside resilient services hiring, helps explain how the topline can mask a broader Q2 slowdown in manufacturing and construction.
Policy Crosswinds Are in the Data: Tariffs & Worksite Enforcement
Policy changes are showing up in the numbers, especially in manufacturing and construction. Two forces stand out: new tariffs, which are lifting input costs and complicating planning; and stepped‑up worksite enforcement, which is thinning crews and stretching schedules.
Tariffs and manufacturing. Manufacturers cut 11,000 jobs in July and survey data points to a contracting factory labor market heading into late summer. New, wide‑ranging import duties lift input costs and inject planning uncertainty into equipment and materials buys. Some firms highlight potential long‑term benefits by reshoring or friend‑shoring and more resilient supply lines. However, in the near term, many are deferring hires, stretching maintenance cycles or repricing bids while they sort out costs.
Immigration enforcement and construction. Construction payrolls were roughly flat (about +2,000), yet project‑level reports describe crews thinning after high‑profile worksite raids. Contractors across the country report immediate effects that include schedule slippage, overtime for remaining crews and higher subcontractor premiums. Even when headcounts hold, crews can become more cautious about showing up, tightening day‑to‑day labor availability.
Balance and perspective. Markets sometimes look through tariffs in the short run, and some business voices argue the policies could accelerate domestic capacity over time. Others like manufacturers, trade economists and supply managers flag near‑term costs, regressive price effects and productivity drags. For project teams, the practical read is straightforward: plan for price and labor volatility until the rules and rates settle.
Expectations vs. Reality (and Why Revisions Matter)
An important part of the economic story lies in the strong downward revisions for May and June as well as the discrepancy between projections and reality for July.
Economists looked for roughly 110–115k jobs in July with unemployment at 4.2%; the report showed +73k and 4.2% — a miss on payrolls, in line on the rate. On its own, a miss of that size can fall inside normal survey noise.
But the revisions are the real headline. May was cut to +19,000 and June to +14,000, a combined 258,000 jobs, reframing late spring as a stall rather than the glide illustrated through the original numbers. June is now the weakest month since September 2020, in the early days of the pandemic. BLS also reminds users the monthly payroll estimate carries a 90% confidence interval around ±136,000, so the revisions should be weighted more heavily than a one‑month miss. On CNN’s News Central, reporters Matt Egan and Zain Asher made the same point. “In order not to be in the danger zone,” Asher said, “there should be a gain of at least 100k jobs per month.” Egan said, “Indicator after indicator has turned out worse than expected.”
For the AEC industry, that translates into longer approvals, tighter escalation assumptions and more pressure to demonstrate cost/schedule certainty during procurement and validation.
Implications for Owners and Teams
July’s jobs data doesn’t indicate a collapse, but it does mark a meaningful shift with slower hiring, steep downward revisions and growing uncertainty from policy changes. For the construction industry, that adds up to tighter margins and increased risk as well as a greater need for predictability.
Design-build’s value grows in times like these. With earlier collaboration and clearer cost visibility, design-build helps Owners and practitioners manage uncertainty without sacrificing speed or quality. It’s why this method continues to gain ground in sectors facing both labor constraints and volatile pricing.
DBIA’s Bookstore offers practical tools Owners and teams can use to strengthen delivery, including guides on Owner readiness, contract documents, best practices and more. As uncertainty grows, the right delivery method and resources can make the difference between stalled plans and successful outcomes.
