Many of these indicators affirm the long-term narrative of a low-hire, low-fire environment that has seen employers scale back on creating jobs while avoiding mass-layoffs of current headcount. This climate of economic uncertainty is also allowing the staffing industry to begin a tepid comeback.
Labor market enthusiasts were denied their monthly insights via the jobs report as a result of the ongoing government shutdown. Yet, there are still plenty of public and private data points which offer a glimpse into the current state of the labor market. Many of these indicators affirm the long-term narrative of a low-hire, low-fire environment that has seen employers scale back on creating jobs while avoiding mass-layoffs of current headcount. This climate of economic uncertainty is also allowing the staffing industry to begin a tepid comeback.
Temporary work, per its name, allows employers and employees to forge short-term professional relationships. These kinds of employment arrangements are ideal at times when employers might have work which needs to be done, but are unwilling to make a long-term commitment on hiring regular staff. That is why, preceding a broader recovery in the labor market, demand for temporary work often rises. And given the current dynamics of the ongoing downturn in staffing employment, it is likely that its recovery will be much slower than previous years, due to the fact that the labor market is expected to remain in this current flux of elevated economic uncertainty as well as higher labor costs.
These trends by a tepid rise within the ASA Weekly Staffing Index, which recently surpassed average levels posted at the same time in 2024. As an indicator of staffing employment, released every month in the jobs report, its latest uptick does suggest that staffing employment should also reach an inflection point within the next several months. That would mean the industry is adding temporary workers rather than realizing further attrition. However, gains in the interim are likely to be small and concentrated in sectors where employers have persisting needs to add headcount.
Despite the decrease in temporary employment, employers are still, in relative terms, leaning on contract roles to maintain flexibility without committing to long-term employment costs.
According to the results from the most recent ASA Staffing Employment and Sales Survey, staffing industry employment edged down quarter-to-quarter, in contrast with an uptick in industry sales which increased 1.5% from the first to second quarter. The slight but notable divergence between employment and revenue helps highlight how the industry is adapting to current economic conditions.
Drilling down by sectors serviced reveals that staffing trends mirrors the broader economy: some winners are finding growth while most others are lagging. Top industrial staffing firms experienced solid first-to-second quarter growth, increasing revenue by 11.5%, but this is not the case for most staffing firms in the industrial sector. While economic turbulence has held back the light industrial space, the data shows there are a handful of winners who have capitalized on their advantages, including serving clients who have limited exposure to rising input costs from tariffs or offering scarce talent with specialized skills that employers need for modern manufacturing. Finding niches could be a sink-or-swim moment for staffing companies serving a struggling sector while being a potential avenue towards growth as well.
In contrast to wide ranges in the industrial or health care sectors, the quarter-to-quarter revenue for the professional-managerial sector was more truncated. This is likely reflective of the broader labor market freeze, as the professional sector is the largest economic sector in terms of total employment, whose job growth has been hit hard this year. While the ceiling is lower, the floor is lower as well, which may suggest a current cautious balance: companies are neither aggressively hiring nor shedding professional staff en masse. Despite the decrease in temporary employment, employers are still, in relative terms, leaning on contract roles to maintain flexibility without committing to long-term employment costs.
If you’d like to receive more timely insights like these, consider supporting ASA research by registering for the ASA Staffing Employment and Sales Survey. The survey field window for the 3Q2025 survey is now open and accepting submissions. All companies that complete the survey get an exclusive complimentary report of the results to help your company benchmark and prepare for what’s to come.
