Americans filing for unemployment benefits declined for the fourth week at a stretch in mid-June. Latest U.S. Labor Department data revealed that seasonally adjusted jobless claims for the week ended Jun 16 declined 3,000 from the prior weeks adjusted level to 218,000. The four-week moving average that evens out the sharp fluctuations in weekly reports declined 4,000 from the previous week’s revised average to 221,000.
Hiring Accelerated to Meet Growth
The manufacturing sector is currently solid with Purchasing Managers' Index (PMI), measured by Institute for Supply Management (ISM), touching 58.7% in May, up 1.4% from the April figure. The sector recorded growth for the 21st consecutive month, driven by continued increase in new orders, production activity and employment.
The service sector is the bellwether of the U.S. economy, employing around eight out of 10 workers. The ISM non-manufacturing index (NMI) was 58.6% in May, recording the 100th consecutive month of expansion. The Non-Manufacturing Business Activity Index reached 61.3%, growing for the 106th consecutive month.
To meet such growth, hiring is accelerating. Non-farm payrolls climbed by 2,23,000 jobs last month after rising 1,64,000 last April, meaning that the economy has now added jobs for 92 months in a row.
Job Openings at an All-Time High
In April, job openings climbed to the highest level since the Department of Labor started recording data on this metric. The figure was 6.7 million, up from 6.6 million in March. The number of unemployed people per vacancy plummeted to 0.9 from 1.0 in March, meaning that companies are keen on hiring workers even as the economy enjoys a nine-year long growth phase after the Great Recession.
Despite the 18-year low jobless rate, a tight labor market is compelling companies to pay higher. Average hourly earnings in May increased 8 cents to $28.92, registering 2.7% year-over-year increase, higher than 2.6% witnessed in April.
Growth Likely to Continue
The Conference Board’s Employment Trends Index was 107.69 in May, registering year-over- year growth of 3.9%. Although slightly down from the April figure of 108.00, the index is expected to grow through the year.
Gad Levanon, Chief Economist, at the Conference Board said that “the decline in the Employment Trends Index in May is probably a reversion to trend after the very rapid increases in recent months.” He added that “with the economy growing well above trend, we expect solid job growth to continue despite the difficulty in filling job openings.”
6 Solid Picks
The latest job numbers bode well for staffing companies. The buoyancy in the staffing space is further confirmed by its Zacks Industry Rank in the top 23% (58 out of the 250 plus groups). In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1.
With the help of the Zacks Stock Screener, we have thus selected six staffing stocks that carry a Zacks Rank #1 (Strong Buy) or 2 (Buy) and have solid expected earnings growth rate for the year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Heidrick & Struggles International, Inc. (HSII - Free Report) is a provider of executive search, culture shaping, and leadership consulting services. It currently sports a Zacks Rank #1. The company expects earnings growth of 66.1% for the current year. The Zacks Consensus Estimate for the current year improved 17.5% in the last 60 days.
Heidrick & Struggles International, Inc. Revenue (TTM)
Insperity Inc. (NSP - Free Report) , engaged in providing an array of human resources and business solutions, also sports a Zacks Rank #1. The company expects earnings growth of 39.2% for the current year. The Zacks Consensus Estimate for the current year improved 12.2% in the last 60 days.
Insperity, Inc. Revenue (TTM)
BG Staffing, Inc. (BGSF - Free Report) is a national provider of temporary staffing services across a diverse set of industries. It carries a Zacks Rank #2. The company’s expected earnings growth rate for the current year is 34.7%. The Zacks Consensus Estimate for the current year improved 3.8% in the last 60 days.
BG Staffing Inc Revenue (TTM)
Robert Half International Inc. (RHI - Free Report) is one of the largest human resource consulting firms in the United States. It also carries a Zacks Rank #2.The company’s expected earnings growth rate for the current year is 29.6%. The Zacks Consensus Estimate for the current year improved 4.3% in the last 60 days.
Robert Half International Inc. Revenue (TTM)
Kforce, Inc. (KFRC - Free Report) is a professional staffing services firm. It carries a Zacks Rank #2. The company has expected earnings growth rate of 40.1% for the current year. The Zacks Consensus Estimate for the current year improved 3.3% in the last 60 days.
Kforce, Inc. Revenue (TTM)
Korn/Ferry International (KFY - Free Report) is a global provider of talent management solutions. It carries a Zacks Rank #2.The company’s expected earnings growth rate for the current year is 18%. The Zacks Consensus Estimate for the current year improved 5.2% in the last 60 days.
Korn/Ferry International Revenue (TTM)
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>