Staffing Stats

Contract Staffing Employment Trends: January 2026 Labor Market Update

Staffing Employment Pulls Back
The American Staffing Association (ASA), Staffing Index declined from 88 in late December to 81 by the week ending January 25. Because the index is published just nine days after each workweek, it serves as a near real-time indicator of staffing demand.

A drop of this size suggests employers are taking a more measured approach to contract hiring as they assess economic conditions early in the year.

Lay Off Data

US marks worst January for layoff announcements since 2009

According to Challenger, Gray & Christmas, U.S. employers announced 108,435 job cuts in January, marking the highest January total since 2009 and a 118% year-over-year increase.

It is worth noting that nearly half of those announced cuts came from just three companies: Amazon, UPS, and Dow. The industries seeing the largest reductions were Transportation, Technology, and Healthcare.

While concentrated layoffs do not necessarily signal broad-based collapse, they do reflect heightened caution among large employers.

Job Growth Remains Modest

The January ADP employment report showed 22,000 private-sector jobs added, indicating slow but positive growth.

Key trends include:

• Mid-sized companies (50–499 employees) drove most of the hiring gains
• Small businesses remained flat
• Large employers continued to scale back
• Manufacturing extended its streak of monthly losses dating back to March 2024
• Education and Healthcare posted a net gain despite cuts within parts of the healthcare sector

This uneven growth environment reinforces the importance of strategic workforce planning.

Regional Hiring Patterns Shift

The Bureau of Labor Statistics reported that payroll employment held steady in 380 metro areas, with growth concentrated in five regions:

• Charlotte, NC
• Philadelphia, PA
• Salt Lake City–Murray, UT
• Rochester, MN
• Fayetteville–Springdale–Rogers, AR

Payrolls declined in the Washington, DC, metro area and in Bozeman, MT.
For staffing firms, this regional divergence creates both risks and opportunities, depending on their market focus.

Labor Force Participation Remains Constrained

The labor force participation rate currently sits at 62.4%, significantly below its 67.3% peak in 2000. Since 2020, it has remained stuck in the 62–63% range.

Talent scarcity continues to be driven by:

• An aging population
• Slower population growth
• Workers permanently exiting the labor force

This structural constraint is unlikely to reverse quickly.

What This Means for Staffing Agencies

Taken together, the data suggest a stable but cautious labor market. Demand remains, but hiring decisions are more deliberate. Talent remains tight, and regional variation is widening.

For staffing agencies, this environment reinforces the need to:

• Educate clients on today’s labor supply realities
• Expand sourcing strategies to include underrepresented and returning worker groups
• Monitor regional demand shifts closely

In 2026, agencies that combine market insight with creative talent strategies will be best positioned to win share in a slower-growth environment.