MARKET OVERVIEW

The employment situation: unemployment at lowest level since May 2024

The unemployment rate dropped to 4% in January, the lowest U.S. unemployment rate since May 2024.

JOBS ADDED IN JANUARY

The labor market added 143,000 jobs in January, falling short of the 170,000 economists predicted.

COMBINED JOB ADDS FOR NOVEMBER AND DECEMBER

The Bureau of Labor Statistics (BLS) revised job adds for December from 256,000 to 307,000 and November job adds from 212,000 to 261,000. With these adjustments, the labor market added 568,000 jobs in November and December—100,000 more than previously reported.

NUMBER OF JOB OPENINGS IN DECEMBER

Job openings fell to 7.6 million in December, down from 8.2 million in November and below economists’ 7.9 million forecast.

QUITS RATE

Both the hiring and quits rates held steady from November to December. The hiring rate, a sign of labor market stability, remained at 3.4%, while the quits rate, a sign of confidence among workers, stayed at 2%.

Sources: Bureau of Labor Statistics, Yahoo Finance, Indeed Hiring Lab, AP News

Leslie Cobb-Hector Senior Vice President and Executive Partner

"The employment landscape continues to shift as economic and political uncertainty grows. While demand for permanent hires remains soft—mainly due to hesitance on the candidate side—contract hiring continues to show strength. Specifically, AI, cybersecurity, and cloud-related roles remain a priority as companies push forward with tech investments to stay competitive. Accounting and finance hiring presents a different challenge. Despite a 4% overall unemployment rate, demand for talent in these specialties remains high, but the supply is struggling to keep pace. As a result, project-based and contract hiring has seen an early-year uptick in these spaces, with year-over-year contract revenue growth across the board. While uncertainties may temper permanent hiring strategies in some sectors, early signs suggest that demand for specialized talent will hold steady in the months ahead."

MARKET OVERVIEW

The SIA | Bullhorn Staffing Industry Indicator

1

The February 2025 U.S. Jobs Report estimates that employment in the temporary-help services industry in January declined 6.1% year-over-year and fell by 0.5% from December.

2

Temporary-help services saw employment decline by 12,400 jobs in January. The BLS also revised December’s numbers from a gain of 5,300 jobs to a loss of 3,000 jobs.

3

Professional staffing hours were down 11% year-over-year in January, while total staffing hours remained below preholiday levels. These numbers reflect a typical seasonal pattern seen in recent years.

4

The SIA | Bullhorn Staffing Industry Indicator showed fluctuating staffing hours in January, with a rebound following the Martin Luther King Jr. holiday. The year-over-year decline remains in line with the drop in temporary-help employment reported in the Bureau of Labor Statistics’ monthly Employment Situation reports.

Source: SIA | Bullhorn Staffing Industry Indicator

Cathy Shim Managing Partner

"Part of the decline in temporary help services and professional staffing hours is expected due to seasonality. However, as more industries adopt automation, AI, and technology solutions, the type of support they need is shifting. As a result, some organizations may be moving away from temporary roles and focusing on long-term employees who can grow with the company.

For employers, this shift means rethinking hiring. Having a clear value proposition is key to attracting top talent, and your hiring partners need to be able to communicate it effectively, too. When short-term contract needs arise, having relationships with the right vendors and companies allows you to stay agile and respond quickly. The businesses that adapt the fastest are the ones that will be able to serve their customers more effectively."

MARKET OVERVIEW

Recession watch 2025

Fed In no rush on more rate cuts

After three consecutive rate cuts in late 2024, the Federal Reserve paused in January, signaling a cautious approach to further rate reductions in 2025. Federal Reserve Chair Jerome Powell noted that while inflation has significantly eased—from its peak of 5.6% to 2.8%—it remains slightly above the central bank’s 2% target. The economy is holding steady, with unemployment dipping to 4% in January—an 8-month low—and gross domestic product (GDP) rising 2.5% year-over-year in Q4. With strong consumer spending and a resilient labor market, the Fed is in no rush to make additional rate cuts, opting to monitor inflation trends before making its next move.

Source: USA Today

Consumer spending powers a slower, but resilient, economy

The U.S. economy grew at an annualized rate of 2.3% in Q4 2024, down from 3.1% in Q3. For 2024, GDP growth slowed slightly to 2.8%, down from 2.9% in 2023.
Consumer spending led the charge in Q4, increasing at a 4.2% annual rate—the fastest in nearly 2 years and up from 3.7% in Q3, reflecting ongoing demand despite inflationary concerns.
Housing construction and renovation saw a 5.3% rebound in Q4, following declines in the two previous quarters, thanks in large part to a focus on apartment buildings.
Business investment declined 2.2% in Q4, largely due to a 7.8% drop in equipment spending and slower inventory replenishment.
The core personal consumption expenditures price index (PCE), a key inflation measure, rose 0.2% in December and is up 2.8% year-over-year. The PCE has now remained above the Fed’s preferred annual core PCE inflation metric of 2.5% for 46 consecutive months.
The Fed reduced interest rates from 4.5% to 4.25% in December, its third consecutive rate cut. The Fed held off on reducing interest rates in January and is only expected to approve two rate cuts in 2025.

Sources: Reuters, Forbes, USA Today

Bart Marcum Managing Partner

"Consumer confidence remains a hot topic in today’s economic climate. Traditional market indicators are harder to read with economic conditions seemingly in a tug of war match—some showing positive trends, and others negative. However, despite a slight drop in GDP, Q4 growth signals that consumer confidence remains strong. With construction and renovation activity on the rise and consumer spending up 4.2% annually, the question isn’t about confidence—but rather trust.

While businesses will always approach investments with caution and analysis, broader economic momentum depends on collective belief in market stability. If trust strengthens alongside confidence, the market is begging to explode—both domestically and globally.”