The staffing industry continued rebounding from the pandemic blues with substantial job gains in professional and business services, transportation and warehousing and private education in August. The economic recovery leading to surge in manufacturing and service activities has been aiding the industry through 2021, enabling workforce solution providers to witness a solid run on the bourse.
Notably, the Zacks
Staffing industry has appreciated 42.2%, year to date, compared with the S&P 500 Index’s 17.1% rally and as against the 19.6% decline of the broader Zacks Business Services sector. Unemployment Down, Wage Growth Up Modestly
From July to August, the unemployment rate was down 0.2% to 5.2% driven by continued strength in manufacturing and service activities. Further, U6, the most rigorous metric of unemployment in the United States, declined to 8.8% in August from the July level of 9.2%. This measure takes into account the individuals who are not searching for employment or those who are working part-time since they cannot secure full-time employment. The average hourly earnings from July to August increased 17 cents to $30.73.
Strong Recruitment Trend
The non-farm payroll in August reported by the U.S. Bureau of Labor Statistics (BLS) was up 235,000. Monthly job growth has averaged 586,000, so far this year. On Sep 8, the Labor Department's monthly Job Openings and Labor Turnover Survey (JOLTS) report revealed that job openings jumped 749,000 to a record high of 10.9 million as of Jul 31, the highest in the history of this data series that commenced in December 2000.
Economic Recovery Behind the Encouraging Numbers
The staffing industry is a major beneficiary of manufacturing and service activities, which, in turn, are dependent on the economic health. A steady recovery is evident from the latest second-quarter 2021 GDP number, which according to the "second" estimate released by the Bureau of Economic Analysis, grew at an annual rate of 6.6% compared with the increase of 6.5% in the “advance” estimate and 6.3% in the first quarter.
With both manufacturing and service activities in the pink, the demand for business services is rising steadily. Economic activity in the manufacturing sector inched up 0.4% from July to August, with the Manufacturing PMI measured by the Institute for Supply Management (ISM) touching 59.9% and marking the 15th consecutive month of expansion after April 2020’s contraction. Although the economic activity in the service sector shrunk 2.4% from July to August, with the Services PMI measured by the ISM touching 61.7%, the reading of above 50% marked the 15th consecutive month of expansion after a two-month period of contraction in 2020.
Given the backdrop, it would be prudent to invest in staffing stocks that have a stellar growth potential for 2021. We have selected four such stocks for you.
Korn/Ferry International ( KFY Quick Quote KFY - Free Report) , a global provider of organizational consulting services, currently sports a Zacks Rank #1 (Strong Buy). You can see . the complete list of today’s Zacks #1 Rank stocks here
The company expects earnings growth of more than 100% for the current year. The Zacks Consensus Estimate for the ongoing year has been revised 23.8% upward over the past 60 days. The stock has appreciated 151.8% over the past year.
RCM Technologies ( RCMT Quick Quote RCMT - Free Report) , a provider of business and technology solutions, currently sports a Zacks Rank #2 (Buy). The company has an expected earnings growth rate of more than 100% for 2021. The Zacks Consensus Estimate for the current-year earnings has moved up 28% over the last 60 days. The stock has gained a massive 339.7% in the past year. Cross Country Healthcare ( CCRN Quick Quote CCRN - Free Report) : This provider of talent management and other consultative services also carries a Zacks Rank of 2, currently. The company has an estimated earnings growth rate of more than 100% for 2021. The Zacks Consensus Estimate for the ongoing-year earnings has moved 20.4% north in the last 60 days. The stock has surged 230.4% in a year’s time. ManpowerGroup Inc. ( MAN Quick Quote MAN - Free Report) : This workforce solutions and services provider also carries a Zacks Rank #2, presently. The company has a projected earnings growth rate of 93.2% for the current year. The Zacks Consensus Estimate for the current-year earnings has moved up 0.4% over the last 60 days. The stock has rallied 50.6% over the past year.