The February Employment Situation was released by the U.S. Bureau of Labor Statistics on Friday, March 7, 2025. It estimated a tepid increase in nonfarm payroll employment of 151,000, missing consensus expectations of 170,000. January estimates were revised down by 18,000, from 143,000 to 125,000, while December estimates were revised up 16,000, from 307,000 to 323,000. With these revisions, nonfarm payroll employment in both December and January was 2,000 less than previously reported, while the three-month moving average including February’s employment was just short of 200,000.
On a sectoral basis, nonfarm payroll employment gains in February were led by health care, which added 52,000 jobs; financial activities, which added 21,000 jobs; transportation and warehousing, which added 18,000 jobs; and social assistance, which added 10,000 jobs. Of note was a decline in federal government employment, which fell by 10,000 jobs in February.
Temporary help services employment also shed an additional 12,300 jobs, from 2.54 million to 2.52 million, yielding a penetration rate of 1.58% in February—down from 1.59% in January. The average weekly hours for temporary help services employees fell from 33.7 in January to 33.2 in February, while those for all nonfarm employees stayed flat at 34.1. The average hourly earnings for temporary help services employees rose from $24.64 to $25.04, while those for all nonfarm employees rose from $35.83 to $35.93.
Headline numbers suggest the labor market remains in good health. But while it is stable, the labor market is not growing. Job growth remains concentrated within just a few sectors, including health care, professional business services, and local and state government. Given the current administration’s proposal to significantly reduce the federal workforce, job growth could see further curtailment over the coming months. Conversely, although unemployment remains healthy, a number of headwinds could push employers to enact more cuts—such as shifts in trade policy, persistent inflation, and a high-interest rate environment. Alongside further acceleration within initial and continuing claims for unemployment, these trends suggest that the labor market will shed more workers over the coming months, with limited hiring creating a backlog of re-entrants.
Temporary help services is also recovering from troughs seen in 2023 and 2024, but improvement is likely to be gradual given trends within the economy at-large. With labor costs remaining elevated, and labor leverage still squarely with employers, firms will likely see limited appetite among clients and talent for traditional services. Demand remains concentrated in segments of the labor market which traditionally employ less temporary workers, such as health care and engineering, IT, and scientific services. But incoming economic policies could also increase demand in more traditional verticals like light industrial and office–clerical services, which could both benefit from labor shortages induced by immigration and any reductions in monetary policy pursued by the Federal Reserve. Wages are likely to rise but remain variable depending upon sectoral supply and demand dynamics, which means staffing firms will have to be cognizant of such changes that could stress relationships between their talent and clients.
Given disparate growth within individual segments of the labor market, there is no one formula for success among staffing firms. However, the ones with the greatest chance of success will have a keen understanding of their clients and talent, as well as the competitive advantages they must utilize to remain relevant.
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