In last month’s IT Staffing Report, we highlighted the latest earnings results from the largest publicly owned IT staffing companies. In this month’s report, we take a further look at those earnings releases, along with other recent employment trends. Overall, we see an interesting assortment of headwinds and tailwinds in the IT staffing sector, with overall sentiment, however, being positive.

Two companies experienced year-over-year (y/y) declines in IT staffing revenue — CTG (NASD: CTG) and CDI Corp. (NYSE: CDI) in Q1 and interestingly, management from both companies highlighted that lower spend from one large customer (IBM) was a major reason behind the revenue decline. Generally, though, the tone from staffing firms has been optimistic, with Robert Half Technology — a division of Robert Half International Inc. (NYSE: RHI) — reporting 9 percent growth and Kforce Inc. (NASD: KFRC), Mastech Holdings Inc. (NYSE MKT: MHH) and On Assignment Inc. (NYSE: ASGN) reporting double-digit growth in their IT staffing businesses. The overall outlook for Q2 was positive as well. CTG and CDI projected y/y declines in IT staffing revenue, but management at CTG noted that carving out IBM would give projected staffing growth of 6.5 percent. KForce, Mastech, and On Assignment indicated a Q2 projection of double-digit y/y growth for their IT staffing businesses.

Given the array of IT staffing jobs and business models, it’s not surprising that a wide range in gross margins was reported. Mastech Holdings noted a gross margin of 18.2 percent for Q1. For the same period, On Assignment noted 41.7 percent and 27.1 percent for its Oxford and Apex divisions, respectively.

Other recent sources of employment data suggest favorable trends in the IT staffing market. The latest employment data from the U.S. Bureau of Labor Statistics indicates continued moderate growth in overall employment, with IT labor as one of the faster-growing categories. Year-over-year job growth for May in the “Computer Systems Designs and Related Services” industry group was 63,700 (3.8 percent growth compared to 1.7 percent growth in overall employment). Moreover, in our May 2014 U.S. Staffing Industry Pulse Survey, median year-over-year revenue growth in the IT staffing market for the month of April was 9 percent.

Information from the U.S. Federal Reserve’s most recent Beige Book (June 4 release) also paints a favorable picture for IT staffing. Improving labor markets and increased demand for skilled workers was a strong theme across most of the 12 Federal Reserve districts. The most frequently noted theme seemed to be that of the discrepancy between increased demand for skilled labor, particularly in IT, and a corresponding shortage in supply. As noted by the Richmond, Va., District, this disequilibrium has placed upward pressure on wages.

Based on these indicators, we anticipate that in the upcoming quarterly releases we will hear generally upbeat tones and comments from management of the public companies in the space. In other words, trends in the U.S. IT staffing market thus far appear consistent with our projection of robust growth of 8 percent for 2014 in our latest forecast report.