The U.S. labor market barely moved in July, with job openings ticking higher while hiring and layoffs both declined. The latest Job Openings and Labor Turnover Survey offered another sign that employers are reluctant to expand their workforces but remain equally hesitant to cut existing staff.
Job openings rose to 7.27 million from a downwardly revised 7.18 million in June, narrowly missing economists’ expectations of roughly 7.31 million. Hiring weakened to just over 5 million, however, reinforcing concerns that opportunities for workers searching for new positions remain limited even as headline unemployment stays relatively low.
Job Openings Edge Higher, but Hiring Loses Ground
Employers had 7.27 million open positions at the end of July, an increase of about 89,000 from June. Manufacturing helped drive the improvement, particularly within durable goods, but the modest increase was not enough to signal a meaningful acceleration in labor demand.
Hiring told a weaker story. Employers brought on roughly 5.05 million workers during the month, down by about 278,000 from June, while the hiring rate slipped to 3.2%. Professional and business services contributed significantly to the decline. The combination of stable vacancies and falling hiring suggests companies may still need workers but are becoming increasingly cautious about actually filling open positions.
Layoffs Remain Historically Low
Despite weak hiring, there is still little evidence of a broad wave of job cuts. Layoffs and discharges declined to about 1.67 million in July, while the layoff rate remained near historically subdued levels. That dynamic has created what economists increasingly describe as a “low hire, low fire” labor market. Companies are not competing aggressively for new employees, but they also appear unwilling to let large numbers of existing workers go. Weekly unemployment claims have told a similar story, remaining relatively restrained despite signs of weaker payroll growth. For investors, that distinction matters: the labor market is cooling, but it has not yet deteriorated into the kind of widespread job losses normally associated with a recession.
Workers Are Staying Put
The quits rate held around 1.9%, offering another sign of caution among employees. Workers generally become more willing to voluntarily leave their jobs when they are confident they can quickly find another position, making quits an important gauge of labor-market confidence.
The subdued rate suggests employees are increasingly choosing stability over searching for better opportunities. With hiring slowing and job availability no longer expanding rapidly, the bargaining power workers enjoyed during the post-pandemic labor shortage has continued to fade. The result is a market that can feel weaker to job seekers than headline employment statistics might suggest. There are still millions of openings, but companies are filling them at a much slower pace.
The Fed Gets a Complicated Labor Signal
The report arrives at a particularly important moment for monetary policy. Federal Reserve Chair Kevin Warsh recently emphasized that inflation remains above the central bank’s 2% target, raising expectations that policymakers could tighten monetary policy again if price pressures fail to improve. July’s JOLTS data does little to force the Fed in either direction.
Weak hiring points to a cooling economy, but low layoffs suggest the labor market remains stable enough that policymakers may still have room to prioritize inflation. That makes upcoming employment and inflation reports especially important. The Fed will have to determine whether slowing hiring represents a manageable normalization or an early warning that tighter financial conditions are beginning to weigh more heavily on the economy.
Looking Ahead
Attention now turns to Friday’s August jobs report after the U.S. unexpectedly lost 23,000 jobs in July. Economists are looking for roughly 55,000 jobs to be added in August, making the report a crucial test of whether last month’s contraction was temporary or evidence of a more persistent slowdown. For markets, the ideal outcome may be modest improvement without a sharp rebound in hiring. Strong employment growth could reinforce expectations for another Fed rate hike, while another weak payroll reading could intensify concerns about the economy. July’s JOLTS report leaves investors somewhere in the middle: the labor market is clearly losing momentum, but employers still are not behaving as though a major downturn has arrived.