Stuck in neutral

August 4, 2026

The number of job openings changed little in June. There were 7.4 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 7.2 million openings a year ago.

The ratio of job openings to unemployed job seekers, a measure of balance in the labor market tracked closely by the Federal Reserve, was flat at 1.0 for the fourth straight month. That shows a labor market in balance.

Real-time data from Indeed Hiring Lab show that advertised job postings have flattened since last September. If you squint, the index rose by one percentage point in July. Labor demand is holding up, but it is not accelerating.

Openings fell by 147,000 in healthcare and social assistance in June; those are the industries contributing the majority of payrolls over the past two years. Hiring and quits both increased while layoffs ticked lower. Again, that points to a healthy sector.

One bright spot: small business labor demand has recovered so far in 2026. Job openings at firms with 1-49 employees increased nearly 13% in June on a three-month moving average basis compared to the end of last year. 

The hiring rate edged slightly higher in June to 3.4% from 3.3%. On a three-month moving average basis, it has been between 3.3% to 3.4% since June 2024. The unemployment rate is near historical lows at 4.2%, but that is little solace for job seekers facing low hiring.

Layoffs were flat overall. They ticked slightly higher in Information and Professional and Business Services. Keep in mind the monthly data are volatile. The risk is that a sustained, slow increase in layoffs in different industries could compound over time.

The quits rate was flat at 2% in June. It has been between 1.9% to 2.1% for over two years on a three-month moving average basis. Low quits should continue to put downward pressure on wages. Employment Cost Index (ECI) data for the second quarter showed that wages declined across most industries. That is good news for the Federal Reserve in its fight against inflation. 

Yet benefits costs in the ECI increased. Rising healthcare costs are weighing on employer margins; higher employee contributions result in lower take-home pay. Workers experience that as a rising cost of living. Mounting healthcare costs are contributing to sticky service sector inflation. Do not look for costs to come down any time soon. 

According to ADP, job changers received a 6.6% pay increase in June; that is flat since March and just a touch above the lowest increase in five years. Pay growth for job stayers was flat at 4.4%. The shrinking wage premium for moving to another job is shaped by and helps shape the lack of churn in the labor market.