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When companies decide whether to add workers, they often start with temporary and contract staff before committing to permanent hires. That habit makes the staffing industry an unusually early window into how employers are feeling. Firms that place temporary workers tend to see demand soften before a slowdown reaches the official jobs data, and they tend to see it recover first when confidence returns. So, when one of the country’s largest staffing companies reports its quarterly numbers, the details can say something about hiring well beyond the company itself.
That is the backdrop for the latest results from Kelly Services, Inc. (NASDAQ: KELYA), a workforce solutions company based in Troy, Michigan. Kelly has been in this business since 1946, when it helped create the modern staffing model, and today it connects roughly 375,000 people with work each year. Its services stretch from temporary staffing and permanent placement to specialty talent in fields such as science, engineering, technology, and education. In shorthand, the company sorts much of that work into segments it labels ETM, SET, and Education.
For the quarter that ended June 28, 2026, Kelly reported revenue of $1.0 billion, down 5.8% from the same period a year earlier. On its own, a decline sounds discouraging, but the more useful part of the story is the direction. The pace of that year-over-year drop improved by roughly 500 basis points (about five percentage points) compared with the previous quarter. Much of the reported decline also traced back to a handful of specific events rather than broad weakness: reduced demand from U.S. federal government contractors and from three large commercial customers accounted for most of it. Strip those out, and the underlying revenue decline was only about 0.6%.
Underneath the headline number, several parts of the business are moving the right way. The SET segment, which covers science, engineering, and technology talent, grew from one quarter to the next for the first time in more than two years. The Enterprise Talent Management (ETM) segment showed improved demand and new business, and even the Education segment, held back by delayed contract decisions and lower student enrollment in some markets, saw its decline ease. It is a picture of a company whose worst trends appear to be flattening rather than deepening.
Profitability tells a more mixed story, and this part rewards a careful read. Operating earnings came in at $16.1 million, down from $22.2 million a year earlier, while adjusted operating earnings were $19.3 million. Adjusted EBITDA, a measure of core operating profit, was $31.1 million, about 15.9% lower than the prior year. The related margin held at 3.0%. That figure was actually 40 basis points below where it sat a year ago, though it rose 110 basis points from the previous quarter, which management pointed to as a sign that cost discipline is starting to show. Earnings per share were $0.31, compared with $0.52 in the same quarter of 2025.
Looking ahead, the company raised its revenue expectation for the full year, now anticipating a low to mid single digit decline rather than something steeper, and it expects its year-over-year performance to keep improving through the second half. Kelly’s board also declared a quarterly cash dividend of $0.075 per share, payable in early September. None of this signals a boom, but it does suggest the company believes the hardest stretch is behind it.
Kelly on its own is not really the point. The steadier read matters more for what it suggests about the wider market for business services. A narrowing revenue decline and firmer sequential trends hint at early stabilization in temporary and contract hiring, the kind of demand that often moves ahead of the broader labor market. It is only one quarter from one company, and the year-over-year figures are still negative, so it is far from a definitive turn. Even so, when a business that has tracked the ups and downs of American employment since the 1940s begins to steady, that is a data point worth filing away.
