While clients are hesitant to add headcount, the staffing industry sits in a unique position to provide stability through flexibility.
Max Aldrich
Weekly Economic Outlook
05/06/2025
Job Market Grew in April, Yet Hiring Is Still on Hold
The economy shrank by 0.3% in the first quarter of 2025, down from 2.4% growth recorded in the previous quarter, according to data released by the Bureau of Economic Analysis. This marks the first contraction in gross domestic product (GDP) since 1Q2022, when severe supply chain disruptions rocked the global economy. Notably, private investment as a component of GDP growth increased from 4Q2024, but nearly two-thirds of that was localized in change in private inventories as businesses rushed to get ahead of announced tariffs. The race to stock up on foreign goods caused net exports to tumble, largely offsetting economic gains, and resulting in a nearly neutral effect on GDP growth.
In more favorable news, the economy added more jobs in April than anticipated, with the unemployment rate holding steady at 4.2% according to the Bureau of Labor Statistics. While this supports the notion the labor market is holding strong in the face of widespread economic uncertainty, only a small number of sectors contributed to job growth last month: health care and social assistance, transportation and warehousing, and financial activities. Employers in all other sectors have effectively paused hiring.
While most employers have not resorted to layoffs, the University of Michigan Consumer Sentiment Survey shows workers are anxious about the state of the labor market. Nearly 70% believe unemployment will increase in the next 12 months—greater than the proportion during the Covid-era recession and equal to the rate seen during the Great Recession. For workers, exiting their job now is a risky prospect and thus many have decided to stay put. The combined effects of low quits, hires, and layoffs have created a stagnant job market with fewer and fewer vacancies.
While clients are hesitant to add headcount, the staffing industry sits in a unique position to provide stability through flexibility. As workforce needs will no doubt evolve throughout the year, staffing companies can highlight their ability to help businesses navigate an uncertain economy, bolster productivity, and avoid long-term commitments.
Consumption Dwindled While Imports Offset Growth in Investment
Source: Bureau of Economic Analysis
Weekly Staffing Research Outlook
05/06/2025
Should hiring pick up and the labor market begin to tilt toward job seekers, culture, compensation, and healthy organizational outlook are important retention drivers to discuss with candidates.
Tim Hulley
Survey Says: Employee Retention Likely to Increase
Employees are more likely to remain at their jobs over the next six months, according to the Eagle Hill Consulting Employee Retention Index, which rose 3.9 points from the fourth quarter of 2024 to 102.5 in the first quarter of 2025. Based on a survey of employed U.S. adults, the quarterly report uses sentiment about organizational confidence, culture, compensation, and job market opportunity to gauge propensity for workers to seek new employment.
The latest report reveals mixed emotions among employees, as confidence in their place of work (2.7), connection to their company culture (2.6), and satisfaction with their compensation (3.3) each rose from the prior quarter. However, improving sentiment about one’s own workplace was tempered by souring perceptions about opportunity in the job market (–2.4), which retreated after having risen in the fourth quarter.
By subgroup, Gen Z workers are most likely to stay put, with a retention index of 112, up 17.2 points from the prior quarter. This was driven by strong gains in organizational confidence (13.9), compensation (13.3), and culture (9.4), along with a marked decrease in job market opportunity (-14.3). By contrast, Millennials are the highest flight risk at 99.9 (down 8.8 points), with Gen X (100.8) and Baby Boomers (102.6) in between. Men (111.9) exhibited higher likelihood of staying in their job than women (92.9), with notable gaps in compensation and organizational confidence.
Despite the relative health of the labor market, pessimism about opportunity is one factor keeping employees in their current roles. However, should hiring pick up and the labor market begin to tilt toward job seekers, culture, compensation, and healthy organizational outlook are important retention drivers to discuss with candidates.
The Eagle Hill Consulting Employee Retention Index
Source: Eagle Hill Consulting
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