Back to top

Image: Bigstock

Initial Claims Lowest Since 1969: Staffing Stocks in Focus

Read MoreHide Full Article

Americans filing for unemployment benefits declined for the third week in a row at March 2019 end. The latest U.S. Labor Department data revealed that seasonally adjusted initial claims for the week ended Mar 30 declined 10,000 from prior week’s revised level to 202,000. This is the lowest figure for initial claims since Dec 6, 1969. It also came below the consensus estimate of 217,000 and Reuters’ estimate of 216,000.

The four-week moving average, which is considered a better measure of labor market trends as it evens out the sharp fluctuations in weekly reports, declined 4,000 from the previous week’s revised average to 213,500 (the lowest level since Oct 6, 2018).

This was the 208th straight week in which filings stayed below the 300,000 threshold, the longest streak since 1970. Declining claims reflects the fact that the labor market continues to remain strong despite a slowdown in economic growth.

Labor Market Continues to Remain in Good Shape

The economy continues to create new jobs despite a record low jobless rate. Per a Reuters report, nonfarm payrolls are expected to increase by 180,000 jobs in March 2019 after a modest addition of 20,000 jobs in February (marking a slowdown from robust job additions in the previous two months). The unemployment rate is anticipated to remain unchanged at 3.8%.

Another report from global outplacement consultancy Challenger, Gray & Christmas claims that planned job cuts by U.S.-based employers reduced 21% to 60,587 in March 2019.

“We see the initial claims data as consistent with healthy labor market conditions and in line with the widely anticipated rebound in the pace of payroll employment in March,” stated Jonathan Millar, an economist at Barclays in New York.

Given this encouraging backdrop, we are looking forward to the March employment report, which is scheduled to be released today.

Manufacturing and Non-manufacturing Solid

The Purchasing Managers' Index (PMI) measured by Institute of Supply Management (ISM) touched 55.3% in March, indicating better economic activity in the manufacturing sector. This marks the 31st consecutive month of manufacturing growth. Also, March was the 110th straight month of growth in non-manufacturing activities, with ISM-measured Non-Manufacturing Index (NMI) touching 56.1%.

Thriving manufacturing and non-manufacturing activities backed by Trump’s favorable policies keep the staffing industry healthy.

Momentum to Continue Through 2019

The staffing industry has been growing roughly two times faster than the economy, on average, since the end of the Great Recession.A strong U.S. economy and Trump’s business-friendly moves have been benefiting manufacturing as well as non-manufacturing sectors, which, in turn, aided the staffing industry in 2018.

The aforementioned factors are expected to benefit the industry in 2019 as well.

Per a recent report by talentnow, the U.S. staffing market is expected to grow from $147 billion in 2018 to $152 billion in 2019.  Global staffing revenues are expected to register 6% growth in 2019 compared with 7% growth in 2018. The unemployment rate is expected to be 3.7% in 2019, the lowest in 49 years.

4 Staffing Stocks From a Healthy Labor Market

With indications that the staffing industry will continue to grow through 2019, investors are expected to continue focusing on staffing stocks. The Zacks Staffing industry currently carries a Zacks Industry Rank #107, which places it in the top 42% of more than the 250 Zacks industries and indicates solid near-term growth prospects.

Let’s have a look at four industry players. Two of these stocks have a Zacks Rank #1 (Strong Buy) or #2 (Buy) while the other two carry a Zacks Rank #3 (Hold). These stocks offer high yields and have good growth prospects. You can see the complete list of today’s Zacks #1 Rank stocks here.

We also take into account Growth Style Score which condenses all the essential metrics from the company’s financial statements to get a true sense of the quality and sustainability of its growth.

Insperity Inc. (NSP - Free Report) , engaged in providing human resources and business solutions in the United States, sports a Zacks Rank #1 and has a Growth Score of A. The stock has rallied 30.6% year to date.

Insperity, Inc. Price, Consensus and EPS Surprise

 

Insperity, Inc. Price, Consensus and EPS Surprise | Insperity, Inc. Quote

The company’s expected earnings growth rate for the current year is 22.4%. The Zacks Consensus Estimate for current-year EPS has improved 6.5% in the past 60 days

Heidrick & Struggles International, Inc. (HSII - Free Report) , a provider of executive search, culture shaping, and leadership consulting services in the Americas and internationally, also sports a Zacks Rank #1 and has a Growth Score of A. This stock has gained 25.8% year to date.

The company’s expected earnings growth rate for the current year is 3.2%. The Zacks Consensus Estimate for current-year EPS has improved 6.6% in the past 60 days.

Robert Half International Inc. (RHI - Free Report) , a provider of staffing and risk consulting services in North America, South America, Europe, Asia, and Australia, carries a Zacks Rank #3. This stock has gained 12.7% year to date.

Robert Half International Inc. Price, Consensus and EPS Surprise

 

Robert Half International Inc. Price, Consensus and EPS Surprise | Robert Half International Inc. Quote

The company’s expected earnings growth rate for the current year is 13%. The Zacks Consensus Estimate for current-year EPS has remained unchanged in the past 60 days.

Resources Connection, Inc. (RECN - Free Report) , a provider of business consulting services under the Resources Global Professionals name in North America, Europe, and the Asia Pacific, carries a Zacks Rank #3. This stock has gained 12.7% year to date.

Resources Connection, Inc. Price, Consensus and EPS Surprise

 

Resources Connection, Inc. Price, Consensus and EPS Surprise | Resources Connection, Inc. Quote

The company’s expected earnings growth rate for the current year is 2%. The Zacks Consensus Estimate for current-year EPS has remained unchanged in the past 60 days.

Zacks' Top 10 Stocks for 2019

In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?

Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.

See Latest Stocks Today >>



More from Zacks Analyst Blog

You May Like