Last week’s jobs report attracted significant attention due to anticipated revisions. The labor market appears cooler, with average monthly job growth for 2023 revised down from 251,000 to 216,000, and from 186,000 to 166,000 for 2024. The labor force grew by an average of 150,000 people per month in 2024, compared to the previously reported 90,000. Job growth now sits slightly above this adjusted labor force growth, suggesting a lower risk of overheating.
Notably, past data revisions reveal that 589,000 fewer jobs were added in 2024 than initially reported. Consumer sentiment has declined for the second consecutive month, reaching its lowest level since July, according to a preliminary release from the University of Michigan. Inflation expectations for the upcoming year have risen to 4.3%, following recent tariff announcements.
A report by CompTIA states that technology companies added nearly 7,000 tech jobs in January, indicating a robust start to the year. The overall tech workforce grew by an estimated 228,000 positions across all sectors, even as the tech unemployment rate rose slightly to 2.9%. The analysis noted a surge in new job listings for tech positions, with over 51,000 added, bringing the total to more than 476,000. User interface and user experience design positions saw a 54% increase in postings, highlighting a shift toward skill-based hiring, with 45% of January’s job listings not requiring a four-year degree.
A survey conducted by Revature found that over 75% of businesses struggle to meet their IT talent needs, leading many to focus on upskilling existing employees. Over 80% of leaders are concerned about attracting technology talent this year, and more than half plan to implement upskilling and reskilling initiatives. Challenges are particularly pronounced in machine learning, artificial intelligence, and generative AI, with data analytics, cloud computing, and cybersecurity also noted as critical areas.
In 2024, small business transactions in the U.S. rose by 5%, with over 9,000 closed deals totaling an enterprise value of $7.59 billion, according to BizBuySell’s Insight Report. The median sale price reached $345,000, with quicker transactions averaging 168 days on the market. Key drivers included a 15% increase in manufacturing acquisitions and a 74% surge in technology transactions. Despite inflation and rising costs, over half of business owners reported high expenses, anticipating further increases due to new tariffs. As corporate professionals and young entrepreneurs enter the market, demand for stable, recession-resistant businesses continues to grow. Brokers predict that seller financing will become increasingly important amid tight lending conditions.
Why do we care?
The labor market is showing signs of cooling, but the revisions to job growth suggest a slower decline rather than a sharp downturn. This is significant for the IT services sector because a softer labor market could ease some hiring challenges while keeping demand stable for outsourced tech services. Let’s not that while the increase in tech jobs is positive, the rise in the tech unemployment rate to 2.9% suggests some underlying weakness.
On the small business front, the 74% increase in technology-related business transactions suggests that IT services, software firms, and tech-enabled businesses are attracting strong investor interest. The rise in seller financing reflects a tighter lending environment, which could impact IT service firms seeking funding for expansion. However, the appetite for stable, recession-resistant businesses suggests that companies with solid recurring revenue models—such as managed service providers (MSPs)—may be in a strong position for acquisitions or growth.
