Weekly Economic & Business Outlook

Could a Rebound in Light Industrial Accelerate Staffing Employment Recovery?

February jobs report data revealed lackluster growth in the labor market, with a modest 151,000 rise in nonfarm payrolls, offset by tepid growth in unemployment to 4.1%. While levels themselves are healthy, most analyses correctly surmised a standstill in labor market growth, which resulted in a payroll contraction of 12,300 in temporary help services. 

When diving deeper into this figure, ASA estimates show that most major verticals within the temporary help services industry posted losses as well: Engineering, IT, and scientific services fell by 21,500 workers between January and February of 2025, alongside a loss of 9,300 workers within the professional, scientific, and technical services industry. Similarly, professional–managerial services contracted by 20,700 workers within this same timeframe, corresponding to a loss of 21,000 supervisory workers across all industries. 

Only one vertical managed to realize growth between January and February—light industrial, which added 6,400 temporary workers on company payrolls, which mirrored gains in construction, a sector that added 19,000 jobs, manufacturing, a sector that added 10,000 jobs, as well as transportation and warehousing, a sector that added 17,800 jobs. Fortunately, the light industrial vertical employs the largest percentage of temporary workers, which provided a critical offset for all other losses. February comprises the second consecutive month of payroll growth within the light industrial vertical, which has blunted the impact of reduced demand in sectors such as health care. 

If this reversal continues, it will enable staffing employment to recover much faster than it did in 2024, when these sectors saw increased demand for temporary workers, but did not employ enough workers to offset losses in light industrial. Yet, light industrial faces a significant number of challenges on the horizon, particularly shifts in trade policy and persistent inflation, both of which could weigh down on labor costs and stymie hiring. While a potential rebound within the staffing industry’s biggest vertical could be a major tailwind for growth, staffing firms should remain cautious considering a fraught economic landscape which would be particularly detrimental to labor dynamics within construction, manufacturing, and transportation and warehousing, which could lead to a potential retrenchment in temporary help services employment.

Small Businesses Are Ready to Grow but Face Recruiting Headwinds

A good mood is building among small businesses, according to a recent Goldman Sachs survey (fielded Feb. 10-17.) Nearly seven in 10 respondents (69%) are optimistic about their financial direction and 46% plan to add employees in 2025. However, despite the desire to grow, these businesses face a plethora of hiring-related challenges—especially in terms of candidate quality. Of those who are currently hiring, more than half (53%) cite the lack of qualified workers as one of their top challenges, along with competition with larger firms (62%), and increasing employment costs (52%). 

The struggle among small businesses to source qualified labor is echoed in the National Federation of Independent Business (NFIB) February jobs report. Nearly one in five respondents (19%) reported that labor quality is their top operating problem, with 12% claiming that labor cost is their greatest challenge. More than half (53%) of all small business owners attempted to hire during the month of February, with 48% claiming there were few (27%) or even no (21%) qualified applicants for their open positions. Among these job openings, small businesses in the retail, construction, and manufacturing sectors had the most unfilled positions in February.

Clearly, there is demand for labor within the small firm economy, but this demand is struggling to be satisfied. The staffing industry excels in sourcing talent when talent is hard to find. Therefore, tailoring services to meet the need for qualified workers is an avenue for opportunity as smaller firms typically lack the ability to go out and recruit scarce workers themselves. By providing targeted employment services, staffing companies can help the rubber meet the road and let small business optimism materialize into revenue gains for both clients and the industry.