Don't Miss The Staffing Market Rally, Buy These 4 Stocks
Zacks Investment Research | Apr 13, 2018 08:49AM ET
The U.S. labor market has maintained a record-low unemployment level and strong job additions since the beginning of the year. The unemployment rate is at a 17-year low with Americans filing for unemployment benefits still below the 300,000 threshold for the 162th consecutive week that ended on Apr 7.
U.S. employers have accelerated hiring driven by a business-friendly tax reform. Modest wage growth also reduced fears of inflation and rate hikes that had bothered employers for quite some time. With job additions staying strong, staffing companies stand to gain the most.
Unemployment Flat, Wage Growth Modest
In March, the unemployment rate remained flat at 4.1%, marking a 17-year low for the sixth consecutive month, despite an increase in wage gains.
Meanwhile, U6, the most rigorous metric of unemployment in the U.S. economy, declined to 8%, its lowest level in 11 years. This measure takes into account individuals who are not searching for employment or those who are working part-time since they cannot secure full-time employment.
Although a tighter labor market is producing better wage growth, it remains below long-run averages. Average hourly earnings in March increased by 8 cents to $26.82, registering only a 2.7% year-over-year increase, marginally higher than the 2.6% pace witnessed in February.
Recruitment Trend Strong
The United States added 103,000 jobs in March. Although significantly lower than February’s addition of 313,000, the average pace of job additions was 202,000 per month during the first quarter, significantly faster than the average gains registered over the last two years. Payrolls were added for 90 straight months, the longest streak since the Labor Department started tracking this data in 1940s.
While the economy continues to create new jobs despite the 17-year low jobless rate, a tight labor market is compelling companies to pay higher to attract and retain employees.
At the forefront of jobs gains last month, were healthcare and construction. Each of these sectors added 22,000 jobs. Job additions in mining amounted to 9,000. However, leading the pack was the professional and business services sector, which added 63,000 jobs. Over the year, the sector has added 502,000 jobs.
The labor force participation rate and the employment-to-population ratio surged to 63% and 60.4%, respectively. Both figures were at their peak since September 2017.
Growth Expected Through 2018
Despite the slowdown in March hiring, the labor market remains strong, as it has been during most of the economic expansion that started in mid-2009. In fact, the slowdown in the pace of hiring gives credence to the view that the economy is near full employment. Broadly, the Trump administration’s business friendly approach, a strong U.S. economy, reduced tax rates, robust manufacturing and non-manufacturing activity, and improvements in the labor market and higher government spending should support additional hiring and wages gain this year.
Per a new industry forecast by Staffing Industry Analysts, the total U.S. staffing market (includes temporary staffing and place and search) is anticipated to go up by 3% in 2018 to a total revenue of $145.1 billion.
Total U.S. staffing market — which includes temporary staffing as well as place and search — will rise by 3% both this year and in 2018, bringing total revenue in the industry to $145.1 billion next year, according to a new industry forecast by Staffing Industry Analysts. U.S. temporary staffing industry revenues are also expected to grow 3% in 2018 to reach a total of $125.6 billion.
The forecast indicates decent growth considering the fact that the expansion cycle has reached its maturity stage.
Our Choices
Solid macroeconomic fundamentals, government’s tax reform along with sustained strong earnings performance are the major tailwinds for the U.S. labor market. Such factors are unlikely to disappear in the near term.
The buoyancy in the staffing space is further confirmed by its solid Original post
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.