US job openings fall in June, but resilient labour market keeps Fed rate hike hopes alive

US job openings declined more than expected in June, signalling a gradual cooling in labour demand, but stronger hiring, historically low layoffs and a modest rise in worker confidence suggested the world’s largest economy continues to enjoy a resilient jobs market that is unlikely to ease the Federal Reserve’s inflation concerns anytime soon.

Data released by the US Labor Department showed job openings, a key measure of labour demand, fell by 178,000 to 7.359 million on the last day of June. Economists polled by Reuters had expected 7.4 million vacancies. While the decline points to slower hiring demand, economists said the labour market remains stable rather than weak.

The latest Job Openings and Labor Turnover Survey (JOLTS) comes as investors closely watch every employment indicator for clues on the Federal Reserve’s next policy move. The US central bank kept interest rates unchanged last week at 3.50 per cent-3.75 per cent, though three policymakers voted in favour of another quarter-point increase. Many economists continue to expect at least one more rate hike this year as inflation risks remain elevated amid higher oil prices linked to the conflict in West Asia.

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Hiring improves despite fewer vacancies

Despite fewer job openings, hiring rose by 96,000 to 5.348 million in June, suggesting companies are still adding workers even as recruitment activity moderates. The hiring rate edged up to 3.4 per cent from 3.3 per cent in May.

At the same time, layoffs and discharges remained virtually unchanged at 1.766 million, keeping the layoffs rate at just 1.1 per cent. Worker confidence also showed signs of improvement, with the number of people voluntarily quitting their jobs increasing by 79,000 to 3.232 million. A higher quits rate is generally seen as a sign that workers remain confident about finding better-paying opportunities.

Healthcare sees biggest drop in vacancies

The sharpest decline in job openings came from the healthcare and social assistance sector, where vacancies fell by 147,000, the biggest monthly drop since July 2025. The sector has been one of the strongest drivers of US employment growth in recent years, supported by an ageing population and rising demand for healthcare services.

Economists said labour supply could become an increasing challenge for healthcare employers following the end of Temporary Protected Status for hundreds of thousands of immigrants from Haiti and several other countries.

Open positions also fell by 86,000 in the leisure and hospitality sector, including hotels, restaurants and bars, partly reflecting the fading employment boost from the recently concluded FIFA World Cup. However, vacancies increased in retail trade and financial services.

‘Slow-hire, slow-fire’ labour market

Several economists cautioned against placing too much emphasis on monthly JOLTS figures because of lower survey response rates in recent years. Even so, they said the broader trend still points to a “slow-hire, slow-fire” labour market — one where businesses are recruiting more cautiously but are also reluctant to cut jobs.

That dynamic is helping keep wage pressures from accelerating sharply while preventing a sudden rise in unemployment, providing the Fed with room to keep its focus firmly on inflation rather than supporting economic growth.

Attention will now shift to Friday’s July nonfarm payrolls report. Economists surveyed by Reuters expect the US economy to have added around 80,000 jobs last month after 57,000 in June, while the unemployment rate is projected to remain at 4.2 per cent.

Trade deficit narrows, but AI imports remain elevated

In a separate report on Tuesday, the US Commerce Department said the country’s trade deficit narrowed 5.6 per cent to $73.3 billion in June as imports declined faster than exports.

Imports fell 1.8 per cent to $388 billion, led by a drop in capital goods such as computers. However, computer imports remain significantly higher than a year ago as companies continue investing heavily in artificial intelligence infrastructure. Exports slipped 0.9 per cent to $314.7 billion, weighed down by lower petroleum shipments.

Economists said net exports are likely to remain a drag on US economic growth over the coming quarters despite the narrower trade gap. The US economy expanded at an annualised pace of 1.5 per cent in the second quarter, supported by resilient consumer spending and continued business investment in AI-related infrastructure.

The latest labour market and trade data reinforce the picture of an economy that is slowing gradually rather than sharply, keeping the Federal Reserve’s fight against inflation far from over while easing immediate concerns about a broader economic downturn.

With inputs from agencies.