The latest U.S. Labor Department data revealed that jobless claims for the week ended Aug 17 declined sharply. The figure was 209,000, down 12,000 from the previous week’s revised level and way below the consensus estimate of 217,000.
This suggests that the labor market is still holding tight despite concerns that the economy may go into recession. While manufacturing and non-manufacturing continue to grow leading to new job creation, a tight labor market is compelling companies to pay higher to attract and retain employees.
A Still-Strong Jobs Picture
The Purchasing Managers' Index measured by Institute of Supply Management (ISM) touched 51.2% in July. This marks the 35
th consecutive month of manufacturing growth. Also, July was the 114th straight month of growth in non-manufacturing activities, with the ISM-measured Non-Manufacturing Index touching 53.7%. For both the metrics, any figure above 50 indicates economic expansion.
Hiring continues to meet such growth. Non-farm payrolls increased by 1,64,000 in July, following a downwardly revised 1,93,000 in June. Average hourly earnings in July increased 8 cents to $27.98, registering 3.2% year-over-year and 0.3% sequential increase.
Labor force participation was 63%, flat sequentially as well as year over year. U-6 (real unemployment) was down 20 basis points sequentially to 7.0. These are solid numbers, reflecting that the jobs picture is still strong.
No Decline in Job Openings
Job openings stayed little changed at 7.3 million in June and the job openings rate was 4.6%. The number of job openings was little changed for total private as well as for government. The number of unemployed people per vacancy also stayed unchanged at 0.8. These suggest that hiring needs persist despite the fear of recession.
Growth Expected to Continue
The Conference Board’s Employment Trends Index touched 110.98 in July, registering year-over-year growth of 1.3%. It was also up from the downwardly revised June figure of 109.30.
Gad Levanon, head of The Conference Board’s Labor Market Institute said that “So far this year, job growth has indeed slowed down compared to 2018, which is not surprising given the modest economic slowdown and the recruiting difficulties associated with a tight labor market. In the coming months, we expect job growth to remain solid, which will be enough to further tighten the labor market.”
Staffing Stocks to Consider
According to Staffing Industry Analysts (SIA), global staffing industry revenues grew 5% in 2018. Per SIA, the industry is expected to witness growth of 4% in 2019 and 3% in 2020.
Below, we have mentioned four staffing stocks that we believe are benefiting from sustained growth of the industry.
One of these stocks carries a Zacks Rank #2 (Buy). We have also mentioned three stocks, which we believe investors should hold on to as these carry a Zacks Rank #3 (Hold).
You can see
the complete list of today’s Zacks #1 Rank stocks here. RCM Technologies ( RCMT Quick Quote RCMT - Free Report) , a provider of short-term staffing, executive search, and placement services, carries a Zacks Rank #2. The company’s expected earnings growth rate for the current year is 32.3%. The Zacks Consensus Estimate for current-year earnings has remained unchanged over the past 60 days. RCM Technologies, Inc. Price, Consensus and EPS Surprise Korn/Ferry International (KFY), a global provider of talent management solutions, carries a Zacks Rank #3.The company expects earnings growth of 5.4% for the current year. The Zacks Consensus Estimate for the current year has remained unchanged over the past 60 days. Korn/Ferry International Price, Consensus and EPS Surprise Insperity (NSP), engaged in providing an array of human resources and business solutions, carries a Zacks Rank #3. The company’s expected earnings growth rate for the current year is 23.7%. Insperity, Inc. Price, Consensus and EPS Surprise Heidrick & Struggles International, Inc. Price, Consensus and EPS Surprise Wall Street’s Next Amazon
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