Market Overview
The Employment Situation: 'What’s cooler than being cool? Steady, stable growth.’
The U.S. economy added 175,000 jobs in April, falling short of the 240,000 number economists predicted.
The unemployment rate rose slightly to 3.9% in April from 3.8% in March, but remained under 4% for the 27th straight month, the longest period since the 1960’s.
Layoffs decreased by 155,000 in March, the most in nearly a year, to 1.5 million. This marks the lowest level of layoffs since December 2022.
The number of people quitting their jobs dropped 198,000 to 3.3 million in March, the lowest level since January 2021.
Mike Doud Managing Partner Vaco
“There continues to be headlines around layoffs (or hiring “freezes”) across industries, including the financial services sector. A lot of times, however, these reflect planned reductions rather than a market collapse. Financial institutions, as well as large public companies, often hire redundantly to mitigate risks. This has a tendency to lead to periodic adjustments when the market slows. As the job market continues to evolve, it's crucial for businesses to foster an environment that values and retains skilled workers, whether full-time, part-time or contingent. This strategy not only supports organizational resilience but also enhances the ability to adapt and thrive in changing economic conditions."
Market Overview
Staffing Industry Indicator
1. The May 2024 U.S. Jobs Report (published on May 3) estimates that employment in the temporary help services industry fell by -6% year-over-year in April and declined by -0.6% when compared to March.
2. Professional staffing hours are down 12% year-over-year but remained consistent throughout the month of April.
3. In April, temporary help services employment declined by 16,400 jobs, contributing to a decrease in the temporary agency penetration rate of 1.7%.
4. The Indicator showed slight improvements for professional staffing hours throughout April. The year-over-year decline is consistent with the reduced temporary help employment numbers found in the U.S. Bureau of Labor Statistics monthly jobs report.
Josh Haymond Managing Partner Vaco
“Recent job market reports highlight a growing trend of businesses and workers seeking regions with favorable living costs, quality talent and a high standard of living. As larger companies face layoffs due to economic pressures, we're observing steady hiring in various markets—with particular spikes in the spring and fall. Companies are increasingly relying on staffing firms like Vaco for staff augmentation to manage workloads without overburdening their teams. Our approach involves deploying salaried consultants to meet the immediate needs of businesses, ensuring continuity and preventing burnout. This strategy is essential for companies aiming to retain talent and maintain productivity during peak periods. By leveraging flexible staffing solutions, businesses can adapt to market fluctuations and continue to thrive.”
Market Overview
Recession Watch 2024
‘The headline number really belies the underlying strength.’ The U.S. economy grew at its slowest pace in nearly two years last quarter as inflation topped Wall Street estimates. Economists pointed out that a large reason for the softer than expected first quarter gross domestic product report was weaker data in trade and exports, which together weighed on GDP growth for the quarter. This news comes as investors try to gauge when the Federal Reserve will start cutting interest rates and if the central bank can achieve a soft landing, where inflation comes down to its 2% target without a significant economic downturn.
Source: Yahoo Finance
Imports Hold Back U.S. Economy in First Quarter, Inflation Flares Up
- The U.S. economy grew at its slowest pace in nearly two years, with the Commerce Department’s first-quarter GDP report showing a 1.6% annualized rate increase after experiencing a 3.4% increase in the fourth quarter of 2023.
- The slower growth is attributed to a surge in imports and a small build-up of unsold goods at businesses.
- Price pressures heated up by the most in a year, with inflation increasing at a 3.1% rate after rising at a 1.9% pace in the fourth quarter.
- Despite the increase in inflation, the Federal Reserve is expected to leave interest rates unchanged until at least September.
- Consumer spending grew at a still-solid 2.5% rate, slowing from the 3.3% growth rate notched in the fourth quarter.
Source: Reuters
Dallas Peterson Managing Partner Vaco
“We're seeing optimism and forward momentum in many sectors, with a notable shift towards managed services and hybrid consulting models. This approach is gaining traction as companies seek efficiency and cost reduction, particularly in tech-heavy markets like Seattle. By partnering with a single partner for project teams, businesses can cut turnover costs by up to 25% and streamline communications. While there is market softness, it's not solely recession-driven but influenced by the election cycle and interest rate uncertainties. Innovation continues to thrive, and the demand for highly skilled tech workers remains strong. Hiring managers should prioritize agility in their planning and be prepared to move quickly on top talent, as the competition for skilled professionals is still intense.”