While economic uncertainty has prompted employers to cut back on job openings and hiring, it has also encouraged them to hold off on parting ways with current staff.
Noah Yosif
Weekly Economic Outlook
07/02/2025
Jobs Week: Expectations for a Shift
Over the past several months, jobs week has become a familiar song and dance of anticipating a collapse in labor market activity resulting from increased economic uncertainty. So far, however, that collapse has not materialized. While economic uncertainty has prompted employers to cut back on job openings and hiring, it has also encouraged them to hold off on parting ways with current staff.
However, recent data suggest there could be a shift toward increased pessimism. Both initial and continuing unemployment claims have increased significantly against annual averages, indicating more separations from the workforce as well as greater difficulties returning to it. This means employers are slowly pairing back long-term headcount expectations by reducing the number of people they bring aboardā€”and even reducing current headcount altogether. These datapoints are complemented by recent data from Challenger, Gray & Christmas, which show layoff announcements in 2025 have risen by 87% relative to 2024, and are up 49% against 2020, which saw the greatest amount of layoffs over the past eight years. In other words, the cadence of cooling in the labor market is likely to continue accelerating throughout the summer.
It is easy to suggest that these trends are due to tariffs, which have waffled throughout much of the past several months. But in reality, tariffs have only augmented the underlying problems which have faced employers over the past two years: higher operating and borrowing costs, which have limited their ability to finance personnel decisions. That is why consensus expectations for the next jobs report project lower nonfarm payroll additions, around 100,000, as well as a higher unemployment rate of 4.3%.Ā
Upside surprises will likely amount to a slower pace of cooling within the labor market, whereas downside surprises will likely constitute an elevated pace of erosion. In either case, the Federal Reserve may not be able to rely on a healthy labor market for much longer to justify maintaining a narrow focus on the inflation side of its dual mandate.
Initial vs. Continuing Unemployment Claims
Source: Department of Labor, American Staffing Association
Weekly Staffing Research Outlook
07/02/2025
Staffing firms are contending with a tough market in which employers and candidates alike are moving more slowly. However, expertise in finding the right fit between employer and employee could be a differentiator at a time when new hires are less satisfied.
Tim Hulley
New Hires Report a Slower Hiring Process
The latest ZipRecruiter survey of new hires reveals a complex job market, with indicators of caution among employers and job seekers alike.
It took longer for the current cohort of new hires to find their jobs. The share of new hires indicating their job search took one month or less fell from 49.1% in Q1 to 40.5% in Q2, while the shares indicating it took one to three months (35.6%), three to six months (15.2%), six to 12 months (6.5%), or more than one year (2.3%) each increased from the prior quarter. The average applications submitted to land a job rose by eight to 39, at the same time, the average number of interviews rose to 15 from eight in the prior quarter.
Some of the slowdown is due to slower-moving employers: The share of new hires who received a job application response in one to three days fell from 53.7% to 44.7% in Q2. On the other hand, new hires report receiving an average 3.5 offers in the course of their job search, up from 2.3 in Q1, suggesting they too are willing to wait for the right fit. Further, 55% of new hires report theyā€™re continuing to look for a new job, despite having been recently hired, indicating retention could be a challenge for employers.
Staffing firms are contending with a tough market in which employers and candidates alike are moving more slowly. However, expertise in finding the right fit between employer and employee could be a differentiator at a time when new hires are less satisfied.
Time Required for Recent New Hires to Find Employment
Source: ZipRecruiter
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