U.S. job openings rise as July payrolls fall

The U.S. labor market is in conflict with itself.

The ratio of U.S job openings to unemployed Americans climbed to 1.05 in July, its highest since January 2025, painting a picture of a labor market that is, on paper, historically tight.

Yet, July’s surprise loss of 23,000 nonfarm payrolls showed a slumping hiring rate.

The conflict leaves the Federal Reserve boxed in as the market awaits today’s NFP numbers.

Stubborn inflation argues against cutting rates, while sudden cooling in hiring makes any hike a gamble with growth.

The ‘Low-Fire, Low-Hire’ Trap The vacancies-to-unemployed ratio is a classic Fed barometer of labor market balance.

The July reading was built on a rise of 89,000 in openings to 7.271 million, according to the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey released Sept.

1. “The ratio of job openings relative to unemployed individuals — that’s a metric of how tight the labor market might be — actually continues to rise, and it’s at its highest level since January 2025,” said Matt Luzzetti, chief economist at Deutsche Bank. “So the labor market is not a reason to not raise rates at this point in time.” Beneath the surface, however, the flow of workers tells a different story.

Hires fell by 278,000 to 5.054 million, dragging the hiring rate down to 3.2% from 3.4%.

The quits rate held at a subdued 1.9%, a sign workers see few better options elsewhere. “The labor market is back in the ‘low fire, low hire’ mode,” said Heather Long, chief economist at Navy Federal Credit Union. “Companies are growing cautious as the war in Iran drags on and borrowing costs have spiked.” The aggregates, however, conceal large sector divides.

Manufacturing vacancies jumped by 79,000, nearly all in durable goods, reaching their highest since December 2023.

Meanwhile, professional and business services hiring, by contrast, plunged by 188,000. “This duality of the labor market is definitely quite striking,” said Sneha Puri, an economist at the Indeed Hiring Lab.

The ‘Ghost Job’ Fallacy Through the 2020s, ghost jobs rose as a deceptive concept that, skeptics might argue, distorts the labor market.

Firms posting online job ads for roles that may not exist is an interesting phenomenon, albeit frustrating for job seekers.

The reasons might be numerous — from pure brand management to something more sinister like data collection.

However, the recent research shows the JOLTS methodology isn’t skewed by these numbers.

BLS research examining survey microdata found potential overcounts in just 0.27% of reports, and including or excluding them left the overall openings rate unchanged.

A separate comparison showed vacancy trends at single-location and multi-location businesses moving in tandem, undercutting the theory that duplicate remote postings inflate the total.

The problem, instead of ghost jobs, is a falling survey response rate.

It has slid to just above 30% from around 58% at the start of the decade.

The falling trend adds volatility and larger revisions.

All Eyes on Payrolls Today’s August employment report now serves as referee between JOLTS resilience and July’s contraction.

Economists polled expect a rebound.

The danger for the currently prevailing September rate hike is a second weak payroll print alongside elevated vacancies — a stagflationary combination that would make every Fed path look wrong.

Image via Shutterstock Read Also: August Jobs Report Preview: What Would Make a Fed Hike a Done Deal?