July 2025 Job Market: Resilient on the Surface, Complex Underneath
As we move through the second half of 2025, the job market is sending mixed signals. Headlines might quote a resilient economy, but beneath the surface a more nuanced picture is emerging.
A Slowdown in Private Sector Hiring
Data from LinkedIn’s July 2025 Workforce Report reveals that hiring across all industries declined 8.4% from May to June and is down 12% year-over-year. This follows a brief uptick in May, interrupting a broader trend of deceleration dating back to March. Hiring is now 25% lower than it was pre-pandemic in June 2019.
Nearly every industry experienced a hiring drop-off in June. Even sectors that performed better still saw negative momentum.
Where the Jobs Are (and Aren’t)
Verstela’s July 2025 Talent Market Insights report paints a similar picture: job growth continues but is heavily condensed. June’s gains came largely from healthcare (+39,000 jobs), state and local government education roles (+70,000 combined), and social assistance (+19,000). Meanwhile, the private sector has shown little momentum outside of these areas.
This highly concentrated growth has effects on job seekers. While opportunities persist, they’re not spread evenly and candidates may need to pivot toward more active sectors or consider contract-based work to stay competitive.
Contract and Skill-Based Work Takes the Spotlight
In fact, contract work is becoming a defining feature of the 2025 workforce. In our recent surveys, roughly 37% of managers say they plan to bring on contract professionals for key projects. Especially in industries like trade compliance, life sciences and marketing. For job seekers, this model offers flexibility and often higher pay. Though it comes with tradeoffs like reduced job security and inconsistent income.
Equally important is the shift toward skills-first hiring. A growing number of employers now prioritize practical abilities over academic credentials. From Forbes’ What To Expect From The Job Market As A Job Seeker In 2025, in the tech sector alone, about half of all job postings no longer require a four-year degree. Many organizations have adopted this approach. This makes the job market a bit more accessible to non-traditional candidates with in-demand skill sets.
Talent Supply Tightening
While demand has softened, labor force participation has stalled. More concerning is the rise in long-term unemployment and discouraged workers. The number of long-term unemployed rose by 190,000 last month and 256,000 more people have stopped actively looking for work because they believe opportunities aren’t available.
These trends hint at a tightening talent pipeline, even if hiring feels slower overall. Fewer people are entering or staying in the labor market, which could lead to future shortages in key roles.
What It Means for Employers
For hiring managers and business leaders, this isn’t a market to ignore. It’s one to understand. Here’s what we recommend as Q3 gets underway:
Focus on priority roles: Now is the time to revisit hiring needs for revenue-driving, compliance-critical or retention-related positions.
Leverage staffing solutions: Temporary or contract workers provide flexibility in uncertain environments without long-term cost burdens.
Continue talent outreach: Despite slower hiring, competition for skilled candidates remains high. Keep pipelines warm and recruitment processes efficient.
What It Means for Job Seekers
To stay competitive in today’s evolving job market, professionals need to be proactive and strategic. Upskilling is no longer a “nice to have,” especially when it comes to digital literacy. Employers across industries increasingly expect candidates to bring a baseline understanding of emerging technologies, regardless of role or department.
It’s also important to move beyond generic job applications. Resumes and cover letters should be tailored for each opportunity, incorporating relevant keywords and emphasizing measurable achievements. Demonstrating clear impact, such as revenue growth or project results, helps hiring teams quickly recognize the value you bring.
The 2025 job market isn’t broken, it’s evolving. While hiring is slower, especially in traditionally strong sectors, growth is still happening. It’s just happening in new places, and under new rules. Organizations that remain agile and talent-focused will thrive, while job seekers who embrace adaptability and skills-first strategies will continue to uncover meaningful opportunities.
As always, Gateway Recruiting remains committed to helping candidates and companies navigate this changing landscape. Whether you’re building a team or seeking your next opportunity, we’re here to help you move forward.