American CEOs are reporting record-low workforce expansion plans, despite the past few days seeing a series of encouraging readings on the health of the labor market.
According to executive coaching and advisory firm Vistage, only 42 percent of surveyed small and midsize business CEOs anticipate increasing their employee headcount in the year ahead. This is the lowest level since Vistage began conducting the quarterly survey in 2003, and is down from 45 percent in the first quarter of 2025.
Meanwhile, 13 percent expect to trim their workforce over the next year, in line with first-quarter levels but at a rate Vistage says has only been seen “during the COVID-19 pandemic and in recessions.”
Why It Matters
While recent payroll figures point to resilience in the labor market, the record-low hiring plans highlight persistent economic caution in the private sector and concerns over business conditions, as well as trade and tariff pressures.
What To Know
Based on responses from 1,537 surveyed between June 2 and 16, Vistage’s CEO Confidence Index dropped to 77.2 points in the second quarter, down from 78.5 for the first three months of the year and well below the 100.8 reading at the end of 2024.
Half those surveyed reported that business conditions had worsened over the past 12 months, compared to only 17 percent who think these have improved. Over two-thirds (69 percent) say trade and tariff policy has negatively impacted their business either directly or indirectly, and 49 percent plan to implement price increases during the current quarter.
However, encouraging signals that the labor market remains resilient have left economists questioning the actual trajectory of the employment landscape.
Vistage’s survey was conducted prior to the most recent nonfarm payrolls report from the Bureau of Labor Statistics (BLS), a closely monitored indicator considered a measure of both economic and labor market health. The unemployment rate dipped to 4.1 percent from 4.2, while the economy added 147,000 jobs in June, with state government and health care seeing the greatest gains. This was up from 144,000 the previous month and surpassed forecasts of 100,000.
While treated by some as evidence of endurance in the jobs market, others were skeptical of the results beyond the encouraging topline figures. Cory Stahle, economist at Indeed Hiring Lab, wrote: “The U.S. job market continues to largely stand tall and sturdy, even as headwinds mount—but it may be a tent increasingly held up by fewer poles.”
“The headline job gains and surprising dip in unemployment are undoubtedly good news,” he continued, “but for job seekers outside of health care & social assistance, local government, and public education, the gains will likely ring hollow.”
On Thursday, the Department of Labor released its weekly count of initial jobless claims. The number of Americans filing for unemployment insurance for the first time. The figure dropped by 5,000 to 227,000 for the start of July, well below forecasts and marking the fourth consecutive weekly decline.
What People Are Saying
Vistage’s Chief Research Officer Joe Galvin told Newsweek: “While June’s jobs report offered a dose of optimism, caution continues to define the underlying sentiment among CEOs. Our latest data shows that confidence among small and midsize business leaders continues to wane, driven by persistent economic uncertainty, geopolitical tensions, on-and-off-again tariffs, and a wait-and-see approach to interest rates.
“Even with signs of resilience in the labor market, many CEOs are holding back on workforce expansion and investment plans amid concerns about rising costs and the evolving impact of AI on productivity. In fact, for the first time in many years, they are starting to consider reducing their workforce.
“The Fed’s anticipated rate cuts later this year could provide some relief, but until there’s more clarity, business leaders are likely to remain on the defensive, focusing on efficiency, agility, and resilience to navigate an extended period of disruption that economists predict will not slow anytime soon as we head into the second half of the decade,” he added.
Nancy Vanden Houten, lead U.S. economist at Oxford Economics, said of Thursday’s initial jobless claims data: “The latest jobless claims data were influenced by seasonal quirks, including the summer shutdown of auto plants, but remain consistent with a labor market characterized by both a slow pace of hiring and relatively few private-sector layoffs. For now, the labor market is healthy enough to allow the Federal Reserve to keep interest rates unchanged as it assesses the impact of tariffs on inflation.
“Claims for benefits by federal employees remain low but that will likely change soon. The Supreme Court earlier this week ruled that the Trump administration may proceed with layoffs of federal workers while legal challenges continue.”
Bill Adams, chief economist for Comerica Bank, in comments shared with Newsweek, said: “The June jobs report’s details were considerably weaker than the headline. State and local government jobs accounted for nearly half of the monthly gain, and within private employment, all of the net increase was in health care, social assistance, leisure and hospitality.”
“It seems clear that job creation will be in low-gear near-term as the private sector digests tariff increases,” he added. “Hopefully, job creation will get a boost from 2026’s tax cut, although cuts to Medicaid spending would cut into employment in health care and nursing homes.”
What Happens Next?
Should the U.S. labor market hold steady, this could delay any action by the Federal Reserve on rate cuts, despite pressure for these from certain Fed officials and President Donald Trump. However, this remains contingent on a range of factors, including next week’s inflation reading and potential shocks to the labor market.
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