It’s not about whether layoffs are happening, it’s about where they are happening.
Weekly Economic Outlook
03/05/2024
Despite increased labor costs driven by historic levels of inflation and interest rates, the labor market has remained relatively resilient. Total nonfarm employment has grown faster than consensus expectations over the past several months, with 1.4 jobs available for every unemployed worker, while wages remain robust to provide a financial cushion against tightening economic conditions. However, some cracks have begun to emerge within the labor market as labor costs continue to grow. Job openings have fallen by nearly 25% since reaching a peak of 12,000 in March 2022, while the unemployment rate has risen to 3.7%, slightly above optimal levels. Furthermore, layoffs are accelerating, with many prominent companies looking toward headcount reductions and restructuring initiatives to bolster capital.
Without meaningful progress on inflation, or relief from the Federal Reserve via rate cuts, we expect labor cost pressures to accelerate, fostering more layoffs even if affecting a fraction of the overall labor force. As shown in the chart below, these layoffs are likely to follow a “last-in, first-out” order, in which sectors that hired the most workers are likely to see the most layoffs, including those within arts, entertainment, and recreation; professional and business services; and construction. Each of these sectors experienced an overexpansion in their labor force following the Covid-19 recession, resulting from low interest rates and major fiscal stimuli providing individual companies with excess capital. These same companies may now look to layoffs as one avenue, however unfortunate, for reducing costs and maintaining growth.

Figure 1: Sectors that Overexpanded their Workforce are More Vulnerable to Layoffs
Weekly Staffing Research Outlook
03/05/2024
Despite exhibiting average growth to start 2024, staffing employment will require further momentum to offset declines from 2023.
How strong is demand for staffing in 2024? We can answer this question with the ASA Weekly Staffing Index—a real-time measure of staffing employment—which as of last week found staffing employment down 10.6% year-to-year, with a rounded Index value of 90. What could be contributing to this decline? Knowing seasonal patterns in staffing employment can offer some clues.
Typically, staffing employment declines sharply during the winter holidays to close each year, followed by a robust rebound in January as momentum builds through the fourth quarter. However, staffing employment during the first seven weeks of 2024 has trailed that period in 2023 by more than 10%.
So, is 2024 off to a slow start? As shown in the chart below, staffing employment grew 13% from the last week of 2023 to the seventh week of 2024—on par with the all-time average of 12% though lower than 2021 (18%), 2022 (22%), and 2023 (18%). However, analysis of the Weekly Staffing Index suggests that the market cooled more than usual in the fourth quarter of 2023—down 21% from the start of Q4 to the end of the year, above the average of a 17% decline.
Despite exhibiting average growth to start 2024, staffing employment will require further momentum to offset declines from 2023. Growth in staffing employment will largely depend on increased economic stability that enables greater turnover within the labor market and greater demand for temporary workers.
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Figure 2: The ASA Weekly Staffing Index is Tracking Typical Ebbs and Flows in Staffing Employment