Three recent studies indicate that hiring remains a priority for companies throughout the economy, an auspicious sign for staffing firms facing economic headwinds.
Staffing firms continue to hire—for now
Staffing jobs for the week ending Sep. 25 increased 6.6% compared to the same period last year, according to the American Staffing Association (ASA) Staffing Index, which tracks weekly changes in temporary and contract employment for small, medium and large staffing firms.
On the down side, that percentage of annual hiring growth has decreased each of the last four weeks and is now the lowest since late February 2021. However, the index was 106.3 for the week ending Sep. 25 following a record-high 107 in early September. It has held strong at greater than 100 for the last year and over 90 since late February 2021. The latter is in line with pre-pandemic levels, indicating the strongest demand for staffing firms since 2018.
The ASA engages a third party to survey roughly 10,000 firms—representing approximately one-third of the industry and serving a variety of subsectors—to gather data points to estimate the total industry employment, sales and payroll.
Hiring levels are up throughout the middle market
RSM’s Middle Market Business Index (MMBI) shows that businesses currently seeking to hire more workers grew to 58% in Q3 2022, compared to 47% in the previous quarter.
There could be multiple factors at play. Retail, hospitality and others may be gearing up for the holiday season. Also, service companies that continue to see the expansion of the sector may be trying to maintain employment levels to fulfill customer obligations. Both factors increase demand for staffing firms.
Overall, the MMBI grew to 138.5 in Q3 2022, indicating great optimism in the middle market. The MMBI surveys business executives to measure the economic sentiment of the middle market. RSM partners with the U.S. Chamber of Commerce in overseeing the survey.
“This quarter’s index is a strong indication that companies continue to feel good about their own business operations, despite persistent negative attitudes on the overall economy,” said Neil Bradley, executive vice president, chief policy officer and head of strategic advocacy at the U.S. Chamber of Commerce. “Inflation challenges remain top of mind, and as labor costs continue to push up, we’re going to continue to see these inflationary pressures in the economy,”
Optimism about the near term
Manpower Group’s Q4 Employment Outlook Survey further confirms the positive employment outlook. Per the study, employers reported a net employment outlook of +33% for Q4 2022, with IT/technology leading the group at +56%. According to the study, organizations with 250 or more employees report the strongest hiring intentions at +41%. This is logical, considering larger organizations tend to experience higher turnover.
What this means for staffing firms
Despite economic headwinds, hiring rates throughout the economy have been stable in the past five months, moving only in the 4.1% to 4.3% range as businesses kept adding more jobs. The hiring rate was unchanged in August at 4.1%.
Meanwhile, many staffing firms have reached or surpassed their pre-pandemic performance. Staffing firms in the middle market can expect steady demand, given recent hiring practices and expected hiring in the near term. Staffing firms must also maintain their internal staffing levels and labor productivity to meet demand and decrease placement times.