Job openings averaged 8.1 million across the second quarter of 2025, down from 8.7 million in Q1 and well below the 12 million peak reached in early 2022. The Job Openings and Labor Turnover Survey (JOLTS) data confirmed what payrolls reports had been hinting at: the labor market was rebalancing as employer demand softened to meet a labor force that had largely recovered to pre-pandemic norms.
The vacancy-to-unemployment ratio — a key measure of labor market tightness watched closely by Fed officials — fell to 1.2 by the end of June, down from a peak of nearly 2.0 in 2022 and approaching the pre-pandemic average of 1.0. Fed Chair Jerome Powell repeatedly cited this ratio in 2024 testimony as evidence that the labor market was no longer a major source of inflationary pressure.
The quits rate — the share of workers voluntarily leaving their jobs each month — fell to 2.1% by quarter-end, the lowest since 2018 and well below the post-pandemic peak of 3.0%. The decline reflects both a reduced supply of attractive outside offers and reduced confidence among workers that switching jobs would yield meaningful improvements in pay or working conditions. The drop in quits has historically been associated with deceleration in wage growth, and that pattern has held this cycle.
Layoffs and discharges, meanwhile, remained remarkably low at about 1.0% — well below the long-term average of 1.2%. This is a key feature of the current cycle: the slowdown in employment growth has been driven almost entirely by reduced hiring rather than by increased layoffs. Companies are hoarding labor, in part because of memories of the 2021–2022 hiring crunch.
Headline payrolls grew by an average of 235,000 per month in Q2 — a touch slower than Q1 but still strong by historical standards. Healthcare added 165,000 across the quarter, government added 84,000, and leisure and hospitality added 67,000. Manufacturing was essentially flat.
The unemployment rate began Q2 at 4.0% and ended at 4.0%, with the modest increase in labor force participation absorbing roughly all of the gap between job creation and population growth. Long-term unemployment ticked up modestly but remained low.
Wages grew 4.1% year over year, with the strongest growth in healthcare and construction and the weakest in information and finance. Real wages — adjusted for CPI inflation — grew at the strongest pace since 2019 as headline inflation continued to moderate.
The Q2 JOLTS data played an important role in the Federal Reserve's communication. By midyear, the case for eventual rate cuts had moved from theoretical to concrete, and senior officials began publicly characterizing the labor market as 'in balance' — the most positive framing in over two years. That framing set the stage for the rate-cutting cycle that began in Q4 2025 and has continued, at a measured pace, into 2026.