Key takeaways:
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Employers remain cautious despite recovering CEO confidence — most hiring managers still expect a recession and companies are proactively cutting costs, streamlining processes, and limiting hiring.
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Economic uncertainty is fueling workforce innovation — demand is rising for training, upskilling, and flexible staffing solutions, creating opportunities beyond traditional placement.
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Staffing agencies can gain a strategic edge by embracing flexibility, preparing for potential volume surges, and offering value-added workforce planning and development services.
While CEO confidence is recovering, hiring managers remain deeply concerned about recession risks, creating a cautious but active market for staffing services.
Only 36% of CEOs now expect a recession within 12 to 18 months — down significantly from 83% in Q2, according to The Conference Board. But Express Employment Professionals found that 80% of hiring managers are still readying themselves for a recession, and almost half are anticipating one within the year.
Cutting costs, reducing headcount
For the first time since 2020, more CEOs intend to decrease their workforce than increase it. About a third (34%) of CEOs are planning workforce reductions over the next 12 months — this is a jump from 28% last quarter.
In the event of a recession, 35% of hiring managers said they’d cut back on hiring, and 17% would completely halt hiring. But most employers (83%) are already taking action rather than waiting for economic downturns, including cutting expenses (45%), streamlining processes (29%), cross-training employees (26%), and not filling vacant roles (23%). This proactive approach creates immediate opportunities for agencies offering flexible workforce solutions.
The Congressional Budget Office estimates a moderate recession could push unemployment from 4.2% to 7.5%, which could add 5 million people to the talent pool — a significant opportunity for prepared staffing agencies.
Turning to training, flexible staffing
Despite recession fears, Express Employment’s survey found that 78% of employers expect to be in a stronger economic position by year-end. And 58% see a potential recession as a growth opportunity, not a threat.
When asked what would help navigate uncertainty, hiring managers identified:
- Training and upskilling programs (60%)
- Flexible staffing solutions (39%)
- Clearer leadership communication (33%)
This validates core staffing industry value propositions while highlighting demand for value-added services beyond traditional placement.
Strategies for successful staffing
With uncertainty shaping employer decisions, staffing agencies have a critical role to play in guiding organizations through shifting economic conditions. By anticipating client needs and aligning services with both short-term caution and long-term growth, agencies can position themselves as indispensable partners in workforce strategy.
- Embrace flexibility: The majority of CEOs are managing rising costs by using technology to boost productivity (93%) and upskilling employees (83%). Agencies can position themselves as partners in workforce agility rather than just suppliers of temporary labor.
- Prepare for volume: While short-term hiring may slow, the potential for significant unemployment increases means agencies should prepare infrastructure for volume surges when conditions improve.
- Focus on value-added services: More than six in 10 companies said recession planning turns their focus away from long-term goals. This creates opportunities for agencies that can provide strategic workforce planning and development services.
Economic fears may be reshaping hiring plans, but they’re also fueling innovation in how companies build, train, and manage their teams. Staffing agencies that embrace flexibility, invest in value-added services, and prepare for shifting demand will be more likely to weather a potential downturn and become stronger, more strategic partners for their clients.
