Making sense of the Q3 labor market: Cooling trends, rising uncertainty and deliberate decisions

As we head into Q4, the Q3 labor market story feels familiar: steady overall, but with growing undercurrents of uncertainty. The headline data shows a gradual cooling, yet the nuances beneath the surface tell a more complex story. Here’s my take on the latest labor market shifts, the key forces shaping them and what we’re hearing on the ground.

Q3 economic milestones & macro trends

Job openings and hiring activity (JOLTS & ADP):

The latest JOLTS data showed U.S. job openings holding steady in August and unchanged from July, suggesting a continued but measured demand for talent. Employers remain active yet cautious, balancing hiring needs with tighter budgets and long-term workforce planning. Meanwhile, ADP’s September report revealed that private-sector employment fell by 32,000 jobs, marking the first decline in months and underscoring a broader “cooling but not collapsing” trend across the labor market.

Rising uncertainty:

While headline inflation has eased from its 2022 highs, core inflation, driven by shelter, healthcare and services, remains sticky. At the same time, tariff shifts are imposing additional pressure on supply chains and input costs, creating ripple effects across sectors from manufacturing to tech.

Compounding these challenges are policy changes and political factors that add unpredictability to the months ahead. Proposed H-1B visa reforms have raised questions about how shifts in the global talent pipeline could impact domestic hiring. For a deeper dive into how these H-1B changes could reshape the future of work, our CEO Jeremy Langevin recent posted an H-1B series on LinkedIn.

The ongoing government shutdown has introduced new strain, reducing public-sector hiring activity and temporarily increasing job-seeker competition in the private market.

Investor sentiment and spending:

Markets have remained volatile but resilient. However, many companies are taking a more deliberate approach to budget planning as they prepare for 2026. We’re seeing longer decision-making cycles and an increased focus on efficiency, productivity and ROI before new hiring is approved.

On-the-ground insights

Our day-to-day conversations across industries continue to reveal a mix of caution and quiet confidence:

• Steady demand, slower pace: Demand for skilled talent remains, especially in IT, digital and business transformation roles, but hiring timelines have lengthened as organizations evaluate each addition more carefully.
  
  
• More intentional workforce planning: Clients are increasingly leaning on flexible staffing models and project-based solutions to maintain agility while managing cost pressures.
  
  
• Candidates weighing stability: While the volume of new roles has cooled slightly, top candidates remain in high demand. However, we’re seeing greater hesitancy to change jobs amid economic uncertainty, even when multiple offers are on the table.

Looking ahead to Q4

As we enter the final quarter of 2025, our teams are hearing consistent feedback: demand is steady, but planning is more deliberate. Companies are thinking long-term, prioritizing sustainable growth and operational resilience over quick expansion.

While the broader market may feel uncertain, one thing remains clear: opportunity still exists for both employers and job seekers who stay flexible and focused. For hiring teams, that means maintaining an efficient, transparent process. For candidates, it means staying open to possibilities, even when the headlines suggest caution.