"Demand for staffing services weakened considerably" in January and February, according to the U.S. Federal Reserve Beige Book report released Wednesday. The Boston Federal Reserve District reported some staffing services registered year-over-year revenue declines of 20% to 50%. The Chicago and Dallas district also reported sizeable declines in staffing firm activity.

The New York district reported that activity at one large employment agency has "virtually ground to a halt."

The Beige Book reported that overall economic conditions worsened in January and February. A pickup in activity isn't expected until late this year or early 2010.