Labor market holds steady

September 1, 2026

Job openings changed little in July. There were 7.3 million jobs available at the end of the month, according to the latest Job Openings and Labor Turnover Survey (JOLTS). That is slightly higher than the downwardly revised 7.2 million openings in June.

The ratio of job openings to unemployed job seekers, a measure of balance in the labor market tracked closely by the Federal Reserve, edged up to 1.1, up from 1.0 over the prior four months. That suggests a slightly improving labor market; the number of unemployed job seekers has declined.

Real-time data from the Indeed Hiring Lab show that advertised job postings have been flat for almost a year. That shows labor demand has not shifted much in that time. Postings are around 2% above the pre-pandemic baseline. Though if you ask many job seekers, they might say the number of postings is thin. Many report a lack of response from employers who have posted jobs. 

The preliminary benchmark revision to nonfarm payrolls through March 2026 estimates that payroll growth was overstated by 79,000 jobs (-0.1%). Average monthly payroll gains therefore changed little. At the aggregate level, the labor market has been consistently stable for more than a year.

The private sector added 41,000 openings in July while the public sector gained 48,000. Openings are up in both sectors compared to a year ago.

Openings fell in professional and business services for the third straight month. On a three-month moving average basis, however, openings were flat on the year. Hires, quits and layoffs all fell in July. That suggests firms are rebalancing their labor forces in the age of AI; some roles are expanding while others are being reduced.

Labor demand continued to grow in small businesses (firms with 1-49 employees). Openings increased nearly 11% on a three-month moving average basis so far in 2026. The number of hires rose 3.2% over the same period. The National Federation of Independent Business (NFIB) found that small business hiring plans have increased, though many firms report difficulties finding workers. 

Some of the worker shortages reported in the NFIB survey could reflect a loss in foreign-born workers. They tend to have an outsized role in filling jobs in food services, hospitality, the care economy and construction.

The hiring rate slipped to 3.2% in July from 3.4% in June. On a three-month moving average basis, hiring was flat at 3.3%. It has hovered between 3.3% to 3.4% for over two years. This low hiring environment is affecting new college graduates and the long-term unemployed. It threatens future talent pipelines within firms, especially as older workers increasingly retire. 

Layoffs fell further, softening the blow from low hiring. The layoff rate ticked down to 1% in July from 1.1% in June. Many worried about the rise in the number of layoffs in the information sector earlier this year. Layoffs have since declined and are below the level at the end of last year. (The monthly JOLTS data tend to be volatile.) 

Some 330,000 Haitian immigrants lost their Temporary Protected Status at the end of July. An estimated 200,000 had work permits. It is unclear how many had paid, formal employment. Employers were required to let those workers go at the end of the month. However, they no longer count among the unemployed, as they are no longer able to work legally.

Quits declined in July, slipping to 1.9% from 2% in June. ADP data show that pay rose 7% for job changers in July; that is up from 6.5% in May. Job stayers received a 4.4% pay increase in July, the same as May. That widening gap, also seen in the Atlanta Fed wage growth tracker, suggests more incentives to change jobs. So far, that has not translated into a meaningful increase in aggregate quits.