The labor market didn’t turn up the dial from cool to hot in January, but it did pick up pace. Employers added 130,000 jobs last month—exceeding economists’ projections—and the national unemployment rate dipped to 4.3%. The Bureau of Labor Statistics (BLS) also reported the unemployment rate for college-degreed professionals who are 25 or older ticked up slightly last month to 2.9%. That’s still well below the national rate—a reminder that competition remains intense for candidates with specialized skills.The overall picture of the U.S. labor market remains challenging to interpret, though. The BLS revised November and December’s job gains down by a combined 17,000, and its revisions to 2025 payroll estimates reinforced just how muted hiring was last year. Reporting disruptions in late 2025 tied to the prolonged federal government shutdown also made it tougher to track labor market trends.December JOLTS data from the BLS shows both employers and jobs seekers remain deliberate in how they’re participating in the labor market. Job openings fell to 6.5 million, the quits rate held steady at 2.0%, and both hires and total separations came in at 5.3 million. Many employers are hiring for roles tied to clear business priorities, while many candidates remain careful about making moves.Learn more about the evolving labor market outlook for early 2026.
Rising business confidence has more employers making hiring plans
The NFIB Small Business Optimism Index has been trending upward, and its Uncertainty Index has dropped to its lowest level since mid-2024. As business confidence grows, more organizations are greenlighting work that sat in the queue through late 2025, and many are launching new initiatives as well.This is prompting more employers to step up hiring, at least in the near term. Research for Robert Half’s latest Demand for Skilled Talent report found that 60% of hiring managers plan to hire permanent staff in the first half of 2026, while 55% expect to bring in contract talent to support immediate needs.
Other labor market trends influencing hiring and job seeking
Growing business confidence is a positive development, but other dynamics in the labor market will continue to define how quickly employers can recruit the talent they need and whether in-demand professionals are interested in exploring new opportunities. For example:Skills gaps remain a defining constraint. In a recent Robert Half survey, only 6% of hiring managers said they believe their organization has the talent needed to complete high-priority projects this year. Nearly two-thirds say skills gaps are more pronounced than a year ago, and 58% say finding skilled talent is more difficult than it was one year ago.Small businesses continue to face tight talent conditions. Robert Half’s data shows that more than 55% of small businesses want to expand their teams. But in the NFIB’s January jobs report, 31% of small business owners reported job openings they could not staff. Among the 50% of owners hiring or trying to hire, 88% reported few or no qualified applicants.Upskilling is a defining career theme for 2026. Nearly 9 in 10 U.S. workers said they’re prioritizing upskilling this year, according to Robert Half’s research. For employers, this presents a clear opportunity to stand out to top candidates by offering roles that include learning options, stretch work and clear advancement paths.Flexible work continues to influence candidates’ decision making. Work flexibility remains a deciding factor for candidates and a real differentiator for employers competing for skilled talent. While 38% of professionals plan to look for a new role in the first half of 2026, only 16% prefer fully in-office jobs, and a majority—55%—say hybrid work arrangements are their top choice. Most employers (88%) provide hybrid options, though practices vary by role, seniority and business needs.Get more details on remote work statistics and trends for 2026.
What the latest labor market trends mean for employers
With job seeker activity increasing and skills shortages persisting, employers need a focused approach to workforce planning so they can hire decisively and keep priority work on track. These 3 strategies can help center your efforts.1. Treat skills gaps as a delivery risk, not just a recruiting issueWhen only 6% of hiring managers say they have the talent needed to complete high-priority projects, that’s a clear execution constraint. It affects timelines, quality and the ability to take on new initiatives.Start by pinpointing where work is slowing down. Then decide which gaps are best addressed through upskilling, permanent hiring or near-term project support. In many organizations, the most effective plan is a mix of talent solutions: targeted full-time hires for recurring, business-critical work and contract support to free up time quickly.2. Use flexible staffing to stay agile and determine true needsA flexible staffing approach can help teams maintain momentum during peak work periods, ease pressure on core staff and maintain progress while permanent hiring takes longer. It can also give leaders space to confirm what skills and coverage are truly needed and to fine-tune roles before making long-term hiring decisions.Robert Half’s research shows a majority of hiring managers are planning to add permanent and contract talent in the first half of this year. 3. Tighten skills validation as hiring becomes more complexThe hiring process itself is getting harder. In a Robert Half survey, 65% of hiring managers said hiring has become more challenging due to the rise of AI-generated applications, and 58% report greater difficulty identifying qualified candidates now than a year ago.That puts more pressure on employers to validate skills. Conducting structured interviews, requesting relevant work samples and setting clear success criteria for roles can all help you to assess capability faster and reduce the risk of a costly bad hire.This is also where a talent solutions firm can add value. When application volume is high and quality is uneven, specialized recruiters can help surface qualified candidates faster, broaden access to hard-to-find skill sets (for both permanent and contract needs), and strengthen the screening process so hiring teams can make decisions more confidently. In a Robert Half survey, 89% of employers said staffing firms have been effective in addressing AI-related hiring challenges.Discover your next hire with Robert Half. Find out more about how hiring with us works.
What the latest labor market trends mean for job seekers
Get the guideHiring was more robust than expected in January, but employers are still choosing candidates carefully and putting more emphasis on skills validation. These 3 steps can help you stand out to hiring managers and move through the process faster.1. Lead with outcomes, then reinforce potentialIn a selective hiring market, candidates need to draw attention to the value they can deliver. When applying for jobs and in interviews, be specific about what improved because of your work—such as time saved, risk reduced, revenue supported and errors prevented.Then, draw attention to your potential as a professional. For example, highlight how quickly you learn new tools, take ownership and adapt to change. But here again, be sure to tie it back to evidence. Many employers are using more structured interviews, work samples and other steps to confirm skills and experience.2. Prioritize upskilling—and make it relevantA clear commitment to upskilling and continous learning can give you an edge, whether you are looking to move up in your current organization or seek a new job elsewhere.Prioritize learning skills or earning professional certifications that show up consistently in job descriptions for the roles that you are targeting, then be ready to demonstrate their impact. For example, point to projects you completed or processes you improved specifically because you learned new skills or knowledge.See our Job Search Strategies Guide for more tips on keeping up with fast-changing skills demands.
3. Prepare for AI screenings and longer hiring processesMany employers use applicant tracking systems (ATS) and AI-enabled tools to screen applications, so it pays to make your materials easy to evaluate. Use a clean, text-based resume with simple formatting, mirror relevant keywords that accurately reflect your experience and quantify results wherever you can. These measures can help you get through early screens and stay in the running as hiring processes stretch out.If your search for a permanent role takes longer than expected, contract work can be a strategic option to keep you active, allowing you to earn both experience and a paycheck. You can build new skills, expand your professional network and gain fresh work examples to bring to your next job interview.Ready for your next career move? Learn how Robert Half can help you find a job.
Dig deeper into U.S. labor market trends in 2026
Go to Labor Market OverviewHiring and employment trends are always changing. Whether you’re an employer, employed professional or a job seeker, Robert Half’s Labor Market Overview page can help you stay informed about how the labor market is evolving in 2026.Visit the page now to find research on specialized skills in demand, hiring trends by experience level, hybrid and remote work trends by professional field, and more.
