Author: Sam Kuhn
Economy-wide breakdown
- At the start of 2025, the labor market looks solid. It grew at a steady rate, averaging 180,000 new jobs a month over a three-month average. Wage growth continues to moderate, trending towards 3.5% as inflationary wage pressures recede and the unemployment rate remains near a historical low of 4.2%.
- Under the hood, though, there are some issues. For one, hiring is very healthcare heavy. In March, 40% of private employment growth was concentrated in healthcare and private education. Outside of healthcare, most industries are experiencing uneven growth grappling with elevated interest rates and heightened uncertainty about trade policy.
- On April 2nd— or “Liberation Day”— President Trump issued a sweeping increase of tariffs that will bring the average U.S. tariff rate to the highest point in more than a century. It includes a 10% across-the-board tariff, affecting all foreign goods imports. The impending fallout from retaliatory tariffs from U.S. trading partners across Europe and Asia will radically shift employment growth in goods-oriented industries like retail, transportation and manufacturing as consumer good prices rise in response to tariffs. Compromises may be reached, and tariffs levels could be lowered.
- In March, Appcast’s Chief Economist Andrew Flowers presented our outlook on the economy in the face of sweeping policy changes. Our base case is a slowdown in economic growth due to immigration and trade policy changes, but not a recession. However, over the past three months consumers’ expectations of inflation have risen rapidly while sentiment around the business environment has deteriorated – a serious warning sign about the future health of the economy. This environment is highly dynamic, and by the time you read this it may be out of date.
Read our economy-wide breakdown of the latest numbers.
In the previous edition of this report, we wrote about a data center investment boom in the technology sector. While this trend may persist through the year, we’ve seen some cracks emerge. Microsoft announced it’s “slowing or pausing” some AI data center projects, which included a billion-dollar plant in Ohio.
This ties back to a longer-term trend across all the economy as the government has reduced their share of R&D spending. Since 2020, the total amount of money invested annually into research and development (R&D) is lower than compared to software products. Simply put, we’re investing less in creating new tangible products in favor of software. Historically, companies invested about 100 billion dollars more into R&D – that figure has now completely been flipped on its head.
Creating the economy of the future will require significant R&D funding from both private companies and the government, but it’s unknown where that capital will come from now.
Employment Trends
Due to uncertainty surrounding tariffs and elevated interest rates, hiring in the tech sector has remained subdued. Three-month job growth is negative, with an average loss of 1,700 jobs.
Slumping investment in R&D leads to subdued job growth. R&D employment growth is growing just above 1% over the year, compared to the faster-growing sectors of engineering (+3.8%) and software (+2.6%), likely due to the surge in investment in software products. Management consulting demand has slowed down, to below 1.1%.
Wage Trends
Like employment growth patterns, wages have also surged for software-oriented sectors, nearing 5% for both engineering and software publisher companies. Wage growth for R&D and management consulting workers is lower as both have been trending downwards, below 2%.
Openings and Turnover Trends
Through the first quarter of the year, hiring activity in the tech sector made a surprising rebound. Hires jumped to 2.7% of total employment from a low of just 2% in 2023, a marked increase. Job openings remain volatile, but still about 4%. Attrition (or voluntary quits) has continued to subside, now near an all-time low of 1.2%. The slow rise in layoffs persisted through the first quarter of the year, reaching 1.2%, a sign of stress in the sector.
Recruitment Marketing Trends
The term “long” or “ATS apply” refers to the conventional application process, requiring applicants to manually submit their tailored application documents and personal details through the company’s website or an applicant tracking system (ATS). In many cases, applicants are required to create a company-specific account.
On the other hand, “easy apply” refers to a swift application process on a job board, often conducted through a smartphone. With a single click, essential information like the resume is transmitted directly to the company. Due to the simplicity of this application method, easy-apply metrics are not directly comparable to those of the “long” or ATS apply. The metrics are therefore presented separately.
Long Apply
Weak employment growth and elevated layoffs have partially kept recruiting costs low in the tech sector on top of growing job seeker interest. Cost-per-click (CPC) ticked down slightly for both science and tech jobs to $1.00 and $1.33 respectively, while cost-per-application (CPA) fell for both sectors to $20 and $14. Labor market trends don’t completely explain these cost mechanics; They have also been impacted by the increase in the conversion rate from click to apply, which has eased costs. The apply rate for science jobs is near an all-time high of 5.6% while for technology it has reached a record high of nearly 9.5%.
Easy Apply
Short-apply methods continue to demonstrate their value as recruitment costs have declined both for clicks and applies. CPCs are trending down, towards the dollar mark. CPAs for science jobs did see a sudden spike toward nearly $11, but this is likely short-term volatility. Tech CPAs inched down to $3.70. Apply rates for science openings did fall modestly to 11.4%, explaining part of the recent spike in CPAs. For tech openings, apply rates continue to climb to new records, trending towards 30%.
Recruitment Marketing Forecasts in Technology
Based on historical patterns, recruiting costs in the tech sector have likely plateaued. Science CPAs are likely to remain in the $10 to $15 range, and CPAs for tech jobs will stay near $11.
What does this mean for technology?
Uncertainty dominates the broader economy. That has seeped into the tech sector, and we see major companies reversing course on their decision to invest in data centers. We highlighted this trend in our previous report, but in just three short months, this has significantly changed. However, software investment continues to rise. AI startups continue to sprout up, which fuels demand for machine learning and software engineers. Tech recruiters will likely continue to see higher apply rates, with lower recruiting costs through the end of the year.
Forecasting Methodology
Cost-per-application (CPA) is forecasted two quarters ahead using the previous two years’ worth of one-month moving average data. A combination of ARIMA, exponential smoothing, and seasonal naïve models are used to create an ensemble forecast. The forecast provides both the 95th percentile confidence intervals, indicating the likelihood that each value will be within the CPA range provided.
