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4 Staffing Stocks to Gain From a Rebound in the Labor Market

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When the coronavirus gripped the United States last year, the labor market was hit hard with economic activities being halted and millions losing their jobs. But thanks to rapid progress in vaccination, which has led to businesses opening up, the labor market is gradually turning around.

For the week ended Aug 14, initial jobless claims fell for the fourth straight week, reaching their lowest level since the middle of March 2020, as mentioned in a Reuters article, citing the Labor Department. The article mentioned, citing the Labor Department, that for the week ended Aug 14, initial claims declined by 29,000 from the previous week to a seasonally adjusted 348,000. A continuous decline in jobless claims indicates that job additions are progressing steadily, which should bode well for staffing firms.

Even though demand for labor has been increasing steadily on continued economic reopening, firms and businesses have found it difficult to fill up job openings. Certain factors have worked against them with several Republicans citing federal unemployment benefits as one of the reasons, including the $300 weekly payment. To boost labor participation in the workforce, 26 states ended federal benefits either in June or July, way earlier than the Sep 6 deadline, as mentioned in a CNBC article. Besides that, concerns related to COVID-19 might have kept people at home and unwilling to get back to work.

But the continued fall in jobless claims indicates that the situation is improving and adding to that positive sentiment, the Labor Department stated on Aug 6 that nonfarm payrolls increased by 943,000 in July, marking the highest gain since August last year, as quoted in another Reuters article. Further suggesting that more people are going back to work, the Reuters article stated that the unemployment rate fell to a 16-month low of 5.4% in July. In fact, to attract more workers into joining, businesses are also offering lucrative benefits and higher wages. The labor participation rate also witnessed an uptick in July, per the article, as it rose to 61.7% from 61.6% in June.

It’s interesting to note that the services side of the economy is resulting in higher job additions. As economic activities are resuming and people are going out more often, consumer spending is shifting from goods to services. This is because people are trying to make the most of the pent-up demand for such services. This is getting reflected in job additions in sectors like leisure and hospitality that increased by 380,000 in July, amounting to 40% of the job gains, as cited in the Reuters article. Employment at restaurants and bars also increased 253,000 during the month, going by the article.

4 Staffing Firms to Buy Now

The U.S. labor market is recovering gradually from the pandemic-related woes of last year as evident from the continuous decline in initial jobless claims. The unemployment rate also fell in July while nonfarm payrolls witnessed an uptick during the month. This seems then an opportune moment to invest in staffing firms with strong fundamentals that can make the most of the renewed strength in the labor market. We have handpicked four such stocks that carry a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Korn Ferry (KFY - Free Report) , together with its subsidiaries, provides organizational consulting services, providing executive search services to fill executive-level positions for clients in the industrial, life sciences/healthcare provider, consumer, and other sectors.

Shares of Korn Ferry have risen 52.8% year to date and it currently flaunts a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings increased 21.5% over the past 60 days. The company’s expected earnings growth rate for the current year is 64.1%.

ManpowerGroup Inc. (MAN - Free Report) provides workforce solutions and services, offering recruitment services, including permanent, temporary, and contract recruitment of professionals, as well as administrative and industrial positions under the Manpower and Experis brands. In the second quarter of 2021, the company reported that its revenues in the United States increased 21.9% year over year.

Share of ManpowerGroup have risen 31.3% year to date. The Zacks Consensus Estimate for its current-year earnings increased 11.2% over the past 60 days. This Zacks Rank #1 company’s expected earnings growth rate for the current year is 89.7%.

Robert Half International Inc. (RHI - Free Report) provides staffing and risk consulting services. The company reported on Aug 17 that its Robert Half mobile app, which is designed to help job seekers, has won a Gold Stevie Award in the 18th Annual International Business Awards.

Shares of this Zacks Rank #2 company have risen 62.7% year to date. The Zacks Consensus Estimate for its current-year earnings increased 17.5% over the past 60 days. The company’s expected earnings growth rate for the current year is 81.1%.

Heidrick & Struggles International, Inc. (HSII - Free Report) , together with its subsidiaries, provides executive search and consulting services to businesses and business leaders worldwide. In the second quarter of 2021, the company reported a new segment, namely, on-demand talent, following the acquisition of Business Talent Group, which generated net revenues of $18.7 million, which was above the company’s expectations.

Shares of this Zacks Rank #2 company have risen 40.1% year to date. The Zacks Consensus Estimate for its current-year earnings increased 17.1% over the past 60 days. The company’s expected earnings growth rate for the current year is more than 100%.


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