Wednesday, September 30, 2009

Restrained Hiring and Moderation in Job Loss Expected for Q4 2009

"CareerBuilder and USA TODAY’s Q4 2009 Job Forecast shows that, while employers are feeling more optimistic about the economy and job market, the majority plan to keep their staff levels the same for the remainder of the year. Continued moderation in job loss coupled with a hesitant approach to hiring is expected for the fourth quarter, according to the survey, which was conducted by Harris Interactive® from August 20 to September 9, 2009. More than 2,900 hiring managers and human resource professionals across industries participated nationwide.

Companies are switching their focus from cost containment to growth. Employers who have instituted pay cuts or layoffs in the last year are reporting that they have begun to restore compensation levels and rehire employees," said Matt Ferguson, CEO of CareerBuilder. "While these are positive indicators, the pace of hiring will remain restrained. It will take time to rebuild the confidence needed in the nation’s economy to trigger more robust recruitment programs."

Source: CareerBuilder

ADP Reports: US Private sector cut 254,000 jobs vs. expectation of 200,000 for Sept

"Private-sector firms in the U.S. cut 254,000 jobs in September, according to the ADP employment report released Wednesday. 

In August, a revised 277,000 jobs were lost compared with the 298,000 originally reported, ADP said.

Goods-producing jobs fell by 151,000, including 71,000 in manufacturing and 73,000 in construction. Services-producing jobs fell by 103,000.

"Employment losses have diminished significantly over the last two quarters," said Joel Prakken, chairman of Macroeconomic Advisers, the economic firm that produces the ADP report from payroll data provided by Automatic Data Processing, Inc.

According to ADP, 7.1 million private-sector jobs have been lost since the recession began, in line with the 7 million lost in the Labor Department's estimate through August.

Monday, September 28, 2009

52% of Unemployment Benefits Expired

With the recent US government data from the source below over half of those that qualify for unemployment has there benefits expired. There continues to be significant weakness in the labour markets. Although, there has been a slight rebound in jobs lost jobs are not created at the level that leads to growth. Presently there are two million college educated graduates unable to attain jobs, let alone the countless numbers with experience and skills who continue to face grave job market conditions. Once this stimulus works itself through the system and does not create the types of sustainable job growth look for this economy to continue to trend down. 


Sunday, September 27, 2009

Why Paychecks Could Shrink

"High unemployment and low inflation may lead to a decline in pay—and that could slow the recovery

For now, pay is still rising—a little less than 2% for the year through June 2008, according to the government's employment cost index. But the weak job market is creating the perfect conditions for a decline in pay: low inflation and high unemployment (9.7% in August). With a huge reserve army of unemployed—more than 2 million of them college-educated—it would be easy for many employers to demand concessions.

One of Wall Street's more bearish forecasters, Goldman Sachs chief U.S. economist Jan Hatzius, predicts that average hourly earnings will fall about half a percent from the fourth quarter of 2009 through the fourth quarter of 2010. Hatzius says his prediction accounts for workers' strong aversion to wage cuts. Without that adjustment, the projection would be negative 2%." 

 Source: Business Week

Wednesday, September 23, 2009

Initial Claims & Continuing Claims

On the 24th, US data will be released concerning initial claims and continuing claims. The market expects 550,000 for initial claims, and continuing claims at 6.1 Million.


The week ending Sept. 19, the advance figure for seasonally adjusted initial claims was 530,000, a decrease of 21,000 from the previous week's revised figure of 551,000. 

4-week moving average was 553,500, a decrease of 11,000 from the previous week's revised average of 564,500. 

Number for seasonally adjusted insured unemployment during the week ending Sept. 12 was 6,138,000, a decrease of 123,000 from the previous week's revised level of 6,261,000.

The interesting news this past week is that the US may provide additional extension of benefits for 27 high unemployment rate states. This means that the government pretty much has acknowledge that unemployment will persist to be a on going problem. Some estimates have come in that unemployment may continue to be at elevated levels till 2011.

So initial claims dropped a bit while more then what the market expected, however continuing claims was more then what the market had expected. Short term wise employment is slowly improving, while longer term structural employment continues to be weak.

Sunday, September 20, 2009

Jobless recovery till December?

A key index shows that an economic recovery is having trouble gathering steam. It also hints that employment won’t edge up until the end of the year.

The nonprofit Conference Board’s Employment Trends Index fell slightly in August, down 0.1 percentage point from a revised July number. The index now stands at 88.1 and is down 18.5% from a year ago.

“The flatness of the (index) in recent months suggests that we won’t see job growth until the end of the year,” said Gad Levanon, the group’s senior economist. “The fact that the index cannot get off the ground is another sign of a weak recovery, perhaps a jobless one.”

Source: Conference Board

Thursday, September 17, 2009

Weekly Jobless Claims Down, Continuing Claims Rise

The Labor Department has come out with its weekly jobless claims, and we are current faced with a very weak market for job growth. Numbers were down 12,000 revised to 545,000. The consensus was 575,000, while the prior figure last week was 550,000 on an unrevised basis and went up to 557,000.

The four week average fell by 8,750 to 563,000.  Continuing claims for the unemployed continues to rise, the figures rose by 129,000 to 6.23 million.  The figures from the prior week would have rose even more if Labour Day wasn't present.

1 out of 10 are out of work on a official figure basis, while 1 out of 10 are either working part-time or under employed. Weekly jobless figures have to be down to 400,000 to see a healthy economy develop.

Wednesday, September 16, 2009

First-Time Jobless Claims Expected to Rise

"The number of newly laid-off workers seeking unemployment benefits likely rose last week, evidence that jobs remain scarce.

Wall Street economists forecast that first-time claims for unemployment insurance rose to a seasonally-adjusted 555,000 last week from 550,000 the previous week, according to a survey by Thomson Reuters. The number of people remaining on the jobless benefit rolls also is expected to increase slightly, to 6.1 million from 6.09 million.

Still, the economy isn't improving fast enough to spur greater hiring. Jobless benefit claims have trended down since topping 670,000 in early April, but remain far above the 325,000 per week associated with a healthy economy.

Fed Chairman Ben Bernanke on Tuesday said the recession is likely over, though he noted that the economy isn't likely to grow fast enough to lower unemployment anytime soon. Most economists expect the jobless rate to top 10 percent next year, up from its current 9.7 percent."

Source: AP

Tuesday, September 15, 2009

US Economy Faces Big Test Next Month

"The economy remains weak and will face a big test next month when the government starts winding down its massive support programs, banking analyst Meredith Whitney told CNBC.

"There's not a lot of new job creation going on on Main Street—and the liquidity to the consumer and small business is still contracting," she said. "And it's very difficult to get the engine moving without a lot of government support within that. So when you slowly wean government supports, that's going to be the test that I think everyone's going to be watching starting in October."

Though economists generally believe the US is pulling out of a recession, unemployment remains high and most economic indicators are still showing only modest improvement.

"Where do the jobs come from?" she said. "Surely if this country becomes massively protectionist we'll build up manufacturing capability. Is that necessarily a good thing? No. There's not a lot of free capital for small business innovation—small business, period—and that's half the workforce."

Source CNBC

Sunday, September 13, 2009

Fewer Layoffs Won't Mean More Jobs

"Companies, still wary of weak consumer demand, aren't doing much hiring. The trend could keep unemployment high for the next year.

Businesses will remain hesitant to hire as long as overall demand remains subdued, and that is almost certain to be the case in the coming year. Spending in the U.S. and elsewhere stabilized last quarter, but the lion's share of growth in the second half will come from companies replenishing their depleted inventories rather than from a resurgence in demand. Plus, businesses remain keen on cutting costs and keeping productivity high. Productivity, measured as output per hour worked, soared at a revised 6.6% annual rate last quarter, and another big gain is on tap for this quarter."

Source: Business Week

Add to this issue is the structural unemployment issue. There are those in the camp that say that temporary workers will be hired back first because companies may want to test out their demand thesis for additional workforce. The problem is that many positions will never return. These are those that are affected by structural unemployment.

Employers currently in the United States have a lot of leverage in terms of their workforce. Those are still hanging onto their jobs may get increased hours which is currently at 33.1 hours worked per work week. Say if an employer needs more production, they can invite their current work staff to bang out more nuts and bolts. Hence, this will in my opinion continue to be a weak environment for hiring.

Thursday, September 10, 2009

MAN Manpower Stock Valuations

So looking at the human resource/business services sector I'll put my opinion on the current valuations of Manpower. I picked Manpower because its valuation were the most out of line with its peer group.

With the recent business outlook survey, not all markets are created equally. I still believe that their larger markets will continue to face downside risk as employment remains choppy. A large portion of their revenue comes from the European market. The US market which is about 10% of Manpower's revenue's will be the first movers in the up tick in hiring. Still conditions in the US remain flat at best for hiring, with no robust outlook for the 4th quarter. Hiring continues to be muted till firms and small businesses find that there is a solid ground for this recovery. This recovery has been mostly stimulus funded. Private businesses which make the brunt of the jobs in the United States continue to face credit limitations and conditions that are less to their liking as the yesteryear. On a macro scale jobs continue to be scare. With an average of six applicants for every free opening, this also challenges the notion that temporary jobs are coming back with a vengeance. Temporary positions also continue to be scare and at a reduced hourly workload. With the average work week of permanent employees at 33.1 hours per week, what would the average temp worker get? These are some serious structural issues that everyone needs to ponder. Many of these jobs that were lost in this recession will not come back. And many workers will need to retrain and possess additional skills to find work.

The stock trades at a lofty valuation. At seventy-one times earnings, while the industry is a negative forty-six, and the S&P trading at eighteen times earnings, Manpower is very expensive compared to its industrial peers and to the S&P. While having very poor earnings and net income growth for the past two years. Unless you feel that valuations at this point merits the lofty valuations then you may look at taking a stake, however at its current valuations there are many other companies that offer significantly more upside and more consistent growth.

Some have said that they have changed the way they value MAN to Price to Book which places MAN at 1.6, while the industry at 2.62, and the S&P at 2.1. This looks historically cheaper then its average, however you also have to take into account how depressed Manpower's business is compared to historical levels. Unemployment around the world still continues to remain at elevated levels. Either way MAN is nearing the top if not the top of their valuations.

Book value is about thirty-two plus dollars a share. While intrinsic value is about forty-two dollars. Either way you are paying a significant premium compared to its peers. Earnings and growth usually lead to price appreciation in shares. Earnings and net income has continued to decline for this past year at alarming levels. At its current valuation you can make the case that MAN is overvalued.

Debt is another issue to be on the side of caution. Manpower has over 873+ million in debt. Manpower also has over 1.1 billion in cash. This all seems well and good, however if there is a protracted decline in their revenue, and net income this cash will continue to face pressure. In this environment there are plenty of companies that are operating at zero to minimal debt trading at much less of a premium compared to the market and its peer group. This includes many technology names with faster growth then say the highly competitive human resources sector. Technology will be the driver of innovation and expansion going forward, either through increases in demand, or through cost cutting. Hiring will remain flat or a tepid bounce from its bottom.

Please do your due diligence regarding your own research on MAN. The information that I provide is just a starter to your own research. The information is out there, and I am just providing a stepping stone for this research. It never hurts to research the holdings that you hold to make sound and educated decisions for long term appreciation.

Tuesday, September 8, 2009

Manpower Employment Outlook Survey Indicates World's Labor Markets Will Still Be Challenged in Fourth Quarter 2009, but Many Headed in the Right Direc

"According to the global Manpower Employment Outlook Survey results released today by Manpower Inc., the fourth quarter of 2009 will continue to challenge job seekers in labor markets around the world, but employer hiring expectations have improved somewhat from three months ago in nearly two thirds of the countries and territories surveyed, suggesting an easing in the pattern of job cuts prevalent for several quarters. Hiring plans are strongest in the emerging markets of India and Brazil, while job prospects remain weak in the United States. However, a greater percentage of U.S. employers expect to keep staff levels unchanged in the quarter ahead, suggesting some stability. Across Europe, hiring sentiments remain generally negative but forecasts have improved in nearly half of the countries compared to the third-quarter forecast."

"Job seekers will still have limited opportunities as our data shows the world's labor markets will not experience recovery in the fourth quarter. The good news is that many markets appear to be heading in the right direction with results from 20 countries and territories showing positive movement from three months ago," said Jeffrey A. Joerres, Chairman and CEO of Manpower Inc. "Interestingly, employers in emerging markets are more optimistic about hiring compared to their counterparts in more developed economies. While a quarter-over-quarter comparison shows modest improvements in six of the G7 countries, with the exception of Canada, all are reporting negative hiring expectations. As demand for their products and services continues to be weak, employers remain very selective in their hiring process, resulting in a sluggish job market."

Employers in 17 of 35 countries and territories surveyed expect some positive hiring activity in the quarter ahead, while those in 15 report negative hiring expectations with 10 reporting their weakest hiring plans since the survey was established. Employers in 31 countries and territories are reporting weaker year-over-year forecasts. Fourth-quarter hiring plans are strongest in India, Brazil, Colombia, Peru, China, Australia, Singapore, Costa Rica, Canada, Taiwan and Poland and weakest in Romania, Spain, Ireland, Japan and Mexico.

Many employers in the 18 countries surveyed in the Europe, Middle East and Africa (EMEA) region continue to report negative hiring expectations for the quarter ahead, with employers in Poland, Norway, Sweden and South Africa reporting the only positive, but slow, hiring activity. However, compared to three months ago, outlooks improved in eight EMEA countries. In contrast, where year-over-year comparisons can be made, hiring intentions are weaker in 15 countries. Job prospects in the region are strongest in Poland and weakest in Romania.

"Eighty percent of employers in Europe are telling us they will make no changes to their staffs, which will most likely lead to some labor market stability in the fourth quarter," said Joerres. "European job seekers in the Manufacturing sector will continue to encounter a difficult market, particularly in Germany, where employers lower their hiring expectations for the sixth consecutive quarter."

Employment prospects have improved in comparison to the third quarter across six of the eight countries and territories surveyed in the Asia Pacific region. However, hiring activity is expected to be slower than historical patterns across the region. Employment prospects are strongest in India, China and Australia with the weakest and only negative outlooks reported in Japan and New Zealand. Compared to 12 months ago, employer hiring expectations are weaker in all countries and territories, most notably in Japan, India and Hong Kong.

"Indian employers have absorbed the layoffs conducted in the third quarter and are telling us they will begin hiring again at a conservative pace, but most intend to keep their workforces intact through the end of the year. Government stimulus efforts around infrastructure projects are contributing to accelerated hiring plans in India's Mining and Construction sector," said Joerres. "Meanwhile, hiring expectations in China are among the most optimistic of the year, with outlooks improving from three months ago across all industry sectors, particularly in the Finance/Insurance/Real Estate and the Services sectors."

Across the nine countries surveyed in the Americas region, hiring expectations have improved from three months ago in all countries with the exception of the U.S. and Mexico, where hiring plans of employers in both countries are at their weakest since Manpower established the survey. On the other hand, year-over-year comparisons reveal weaker hiring activity throughout the region. Manpower surveyed Brazilian employers for the first time this quarter.

"The solid job prospects in Brazil are being bolstered by the Services sector where 37 percent of employers expect to add employees in the quarter ahead. Employer optimism in Canada bounces back into positive territory with the Construction and Finance/Insurance/Real Estate sectors holding the most promise for job seekers," said Joerres. "To the south, the U.S. and Mexican labor markets continue to struggle in tandem, with the majority of employers continuing hiring freezes, opting instead to get work done with the staff they have until conditions improve."

Source: Manpower


With this report, it shows that Manpower's largest market including France, and the United States have not shown robust growth. Hence, with valuations in question be cautious going forward with this choppy return some stability.

Disclosure: No affiliation with Manpower.

Manpower Employment Outlook Survey Projects a Weak Hiring Pace for Q4 2009

"U.S. employers plan to keep their staffing levels relatively stable during Quarter 4 2009, according to the seasonally adjusted results of the latest Manpower Employment Outlook Survey, conducted quarterly by Manpower Inc.

"The hiring intentions of U.S. companies continue to be sluggish," said Manpower Inc. Chairman and CEO Jeff Joerres. "While there are areas within the U.S. which are showing an uptick, we have yet to see the robust hiring intentions that would indicate a full labor market recovery."

Of the more than 28,000 employers surveyed, a significant 69% expect no change in their October - December hiring plans. Twelve percent anticipate an increase in staff levels, while 14% expect a decrease in payrolls, resulting in a Net Employment Outlook of -2%. After seasonal adjustment, the Net Employment Outlook becomes -3%, the weakest in the history of the survey, which began in 1962. The final 5% of employers indicated they were undecided about their hiring intentions.

"Despite some moderating signs, such as the considerable number of employers that plan to maintain or increase staff levels, there will continue to be challenges for both job seekers and employers in the coming months," said Jonas Prising, Manpower president of the Americas. "Hiring in the Wholesale & Retail Trade sector, for instance, is expected to be down in the fourth quarter, suggesting that employers will not be adding the quantity of holiday hires they have in the past.""

Source: Manpower

Fewer planning to add in the 4Q 2009

"The Manpower Employment Outlook Survey released Tuesday shows 8 percent of surveyed employers in the area plan to hire workers from October to December, while 9 percent are planning to cut employees. Three-quarters of all surveyed employers aren’t planning any change for staffing levels, while 8 percent said they’re uncertain of hiring plans.

The nationwide outlook for the fourth quarter found more employers planning to take action, though more are eyeing cuts than additions. Manpower’s national survey of more than 28,000 employers found 12 percent plan to hire, 14 percent plan to cut and 69 percent don’t plan any changes.

Manpower noted that while the majority of employers plans to hold staffing levels steady or add workers, the employment outlook for the fourth quarter was weaker for all regions of the U.S. compared with last year. The outlook for the Midwest, compared with other regions, was stable, the Milwaukee-based firm said."

Source: Business First

As I have continued to point out that growth in hiring continues to be weak. Moving along the bottom does not mean growth. It'll be interesting to see if the stimulus will lead to job growth or not. Without a temporary pop in the growth of jobs, another recession maybe coming.

Sunday, September 6, 2009

Temp Hiring Falters Again

"Job losses in August were widespread, but Joe LaVorgna, chief U.S. chief economist at Deutsche Bank noticed concerning trends in temporary employment, as well as factory hours.

LaVorgna noted that while job cuts were spread through different segments of the economy, Temp hiring, a typical leading indicator of permanent hiring, dropped by 7,000 marking the 19th consecutive monthly decline.

For some time now the recovery has been expected to be led by business, as the U.S. consumer struggles with job security, diminished personal wealth and tight credit. Though the rate of job cuts is abating, the unemployment rate is expected to remain elevated through the first half of 2010. This is worrisome for Main Street, Wall Street and Washington as each have a keen interest in seeing Americans going back to work, off government benefits, and fully able to pay bills and consuming again."

Source: Forbes

Saturday, September 5, 2009

Permanent Job Cuts

“No matter how you slice it or dice it, the U.S. economy remains fundamentally weak.”

That’s how David Rosenberg, formerly chief North American economist with Merrill Lynch, looks at today unemployment report in his daily newsletter, which he pens from his new perch at boutique investment firm Gluskin Sheff. Despite doses of government fiscal stimulus that are “dulling the pain” of contracting GDP, there is nothing the government can do about employment, writes Rosenberg, short of making firing illegal.

Sifting through the details of the Bureau of Labor’s report, details he calls “simply awful,” Rosenberg notes that 65% of companies are still cutting jobs, a “disturbing” stat, and manufacturing employment fell by 63,000 jobs in August, it’s lowest level since 1941 despite inventory replenishment that’s been widely reported.

Further, Rosenberg notes the shadow numbers, much of it buried in the “Household Survey.” The actual decline in employment was cushioned by more people working at home. Salaried workers, on the other hand, dropped 637,000, the largest decline since March. The household survey actually shows employment fell by 1 million, writes Rosenberg, if you dig into the details, “which is unprecedented,’ he notes.

Further, nine million people are now “working part-time because they have to, not want to,” adds Rosenberg. The adult male employment rate — males lost jobs at a faster rate than women in the August numbers — is already above 10% in the U.S.

Lastly, those looking for a job for more than six months without success are now a record one third of the total jobless, at 5 million, which Rosenberg argues portends a long-term trend in jobless — longer than the current downturn, in other words.

In conclusion, Rosenberg ends with some articles in The Wall Street Journal from August and September of 1930, after over a year of the Great Depression. The articles mentioned investors looking for places to put money to work in the stock market after a big 50% run-up.

“We only know now with perfect hindsight what these pundits did not know back then,” writes Rosenberg. “That there was another 80% of downside left in the bear market.”

Source: Gluskin Sheff

Friday, September 4, 2009

Less Optimistic Stance

National Small Business Association shows that its members are less optimistic as of July 7. Though the percentage of people expecting a recession in the next 12 months has decreased to 42 percent from 64 percent in December 2008, 51 foresee a flat economy and only 7 percent anticipate economic expansion.

Consumers also look for the job outlook to worsen , with 26.3 percent expecting fewer jobs in the months ahead

Source: forex

Put Warning Signs On Career Path

Human resource executives are advising college freshmen to pursue degrees in engineering, computer science or health care if they want to boost their chances of being hired after graduation. The survey of 150HRexecs by global outplacer Challenger Gray & Christmas urged students to avoid careers in law, marketing/advertising and, ironically, human resources. Only 2% of HRexecs thought human resources would be worth pursuing in college.

“This recession may have many freshmen second-guessing career plans. Certainly those who were contemplating a future in financial services or homebuilding may be looking for new options,” said firm principal John Challenger.

Structural rather than cyclical influences on unemployment are running well above normal during the current recession

Structural rather than cyclical influences on unemployment are running well above normal during the current recession, as is highlighted by the percentage of the unemployed that are “not on temporary layoff.” 

Data from the Bureau of Labor Statistics

show that 53.9% of the unemployed were not on temporary layoff in August, up from 39.1% a year earlier and well above the 30-year average of about 34%.  The current level is well above the peak of previous cycles, which tended to move above 40% and was as high as 44.9% in May 1992. Many job losses are occurring in industries with broken business models and jobs won’t return quickly.  This will put downward pressure on wages.

Source: Bloomberg

France’s unemployment rate climbs

"France’s unemployment rate climbed to the highest in at least three years in the second quarter as companies cut jobs in an effort to squeeze costs after the worst recession since World War II.

The jobless rate rose to 9.5% from a revised 8.9% in the first quarter, Paris-based statistics office Insee said today. Excluding France’s overseas territories, the unemployment rate increased to 9.1% from a revised 8.5% in the first three months of the year.

While France exited a yearlong recession in the second quarter, with gross domestic product expanding 0.3%, economists expect more job cuts as companies implement decisions taken when the economy was shrinking.

“Assuming the turning point in the economy came in the second quarter, that would imply unemployment peaking at the beginning of 2010 at the earliest,” Laurent Bilke, an economist at Nomura International in London, said by phone before today’s report. “Jobs decisions are very heavy, they’re the last thing you adjust.”

Companies such as Alcatel-Lucent SA and Air France-KLM Group are trimming their workforces to match weaker sales triggered by the recession.

Almost 700,000 jobs will be shed in 2009, Insee forecast last month. So far this year, 420,900 jobs have been lost, according to Labor and Finance Ministry numbers.

The government is preparing for further job cuts this year by hiring employment agencies to help jobseekers find temporary work. In June, the Finance Ministry began offering 1,000 euros (1,428) to companies for every person hired as an apprentice in an effort to combat youth unemployment. The measure is scheduled to remain in place for one year."

Source: Reuters


This is an interesting piece. During the last conference call, Manpower said that the French market has stabilized. It will be interesting to hear Manpower provide more color regarding their French market where they are the market leader if they indeed see this market stabilize. The European market continues to see high unemployment rate and bleak signs of an upturn. Although France and Germany have seen an up tick, it remains to be determined to see if this is sustainable.

U.S. unemployment rate jumps to 26-year high of 9.7%

"The U.S. unemployment rate jumped to a 26-year high of 9.7% in August as nonfarm payrolls fell by 216,000, the 20th consecutive monthly decline, the Labor Department estimated Friday."

"U.S. payrolls have dropped by 6.9 million to a total of 131.2 million since the recession began in December 2007, the government data showed. Unemployment has increased by 7.4 million during the recession to stand at 14.9 million. 

"Joblessness continues to mount, which will only make it harder for households to repay debt and build savings, thereby impeding a consumer-led recovery," wrote Sal Guatieri, senior economist for BMO Capital Markets."

Source: Marketwatch 

August 2009 Employment Report - BLS


Thursday, September 3, 2009

Unemployment Rate By State and County

Visit this site to check on how your county and state are doing in terms of government unemployment numbers.

Source: Google

Hay's 2009 Annual Earnings

Financial highlights
  • Difficult market conditions, particularly in the second half, resulted in a reduction in Group fees and profit
  • Increase in cash generated by operations to £260.9 million, primarily due to unwind of working capital
  • Strong balance sheet with net cash of £0.7 million (2008: net debt of £81.1 million)
  • Dividend maintained at 5.80p
Operational highlights
  • Temporary placement net fees down 7%* and permanent placement net fees down 29%*
  • Advantage taken of opportunities in resilient markets particularly in the public sector and Germany
  • 24% reduction in cost base in June 2009 versus June 2008 following early and continued action taken to protect profits
  • Selective development of the International business, now representing 51% of Group net fees
  • Investing for the long term including key IT efficiency projects and corporate account development

* LFL is like-for-like growth, which represents organic growth of continuing activities at constant currency. There were the same number of trading days in 2009 and 2008.

Commenting on these results, Alistair Cox, Chief Executive of Hays, said:

"The recruitment markets in the past year have been the most challenging on record. However, Hays has performed creditably due to our scale, the strength of our market positions, our early action to address the cost base and our ability to redirect resources to more resilient sectors such as Education, Healthcare, Oil & Gas and Pharmaceutical. We are also continuing to gain market share across the world and are investing in new markets including India and Russia. In addition, we are very pleased to have signed a series of significant recruitment contracts with leading global companies drawing on the full range of our expertise.

Currently we are seeing initial signs of stability in the United Kingdom and Asia Pacific markets although no indications of recovery. The Continental European markets, which entered the downturn later than the other regions, are still experiencing deteriorating conditions. Whilst we anticipate that 2010 will be another tough year for our industry, we will continue to take advantage of the downturn to build market share and pursue our investment plans to strengthen our operations for the long term. We are managing the short term whilst investing for the long term.


Spain unemployment hit 17.9% for 2Q 2009

The Spanish unemployment rate hit 17.9% at the end of the Q2 2009, according to Spain’s National Statistics Institute (INE), the highest level in the eurozone and well above the 8.9% average of the 27 EU member states. In fact, Spain makes up over half of the past year’s increase in eurozone unemployment, with over 30% of the eurozone’s jobless living in Spain. The Organization of Economic Cooperation and Development (OECD) predicts that Spain’s jobless will reach 20% of the workforce during 2010, gradually edging closer to the historic high of 24% recorded in 1994. Youth unemployment is particularly severe, with one in three workers under 25 years old facing a prolonged period out of work. At the end of the Q2 2009, Spain’s GDP was down 4.1% y/y with domestic consumption expected to fall 4.5% by the end of 2009.

The large number of unemployed not only presents obvious economic difficulties for Spain such as falling productivity and a heavy drag on demand but the social consequences are also being felt. Protests have erupted across Spain as citizens struggle to deal with the economic crisis. Jobs have become the primary concern for the electorate, overtaking terrorism at the start of the year. Every country across Europe has suffered from the economic contraction. Yet Spain’s catastrophic housing collapse and towering unemployment figures make its plight stand out. The downturn has been aggravated by Spain’s rigid, antiquated and embedded labor regulations. As Luis Garicano of the London School of Economics argues, “that the crisis has hit Spanish employment disproportionately is due to the catastrophic way the labor market works.” Unless action is taken to remedy the underlying causes of Spain’s unemployment crisis, the country faces a prolonged and dire recession.

Source: RGE

Ira Schnell at Kaufman Bros. "Morning Note"

After showing some cracks in the foundation over the last few days, I got the sense yesterday that people were content to look for further evidence of a breakdown before they need to start kicking out their longs and/or laying the shorts out again….Almost like everyone was waiting around looking for someone else to make the first move…Certainly cant blame institutional or retail investors for acting this way, because over the last few months, if you sold after initial cracks in the foundation formed, you got very burned.

Combine that with the fact Labor Day is fast approaching, and maybe we get a pause here before the next move (unless Friday’s non farm payroll # is way off consensus, in either direction)…And after virtually 6 months of equities going straight up, I don’t think you can discount the fact that even if they are going to unwind this thing, you might get one last sucker rally right back through 1010 to 1020, before they finally hit this thing through 970 to 980….I talked yesterday about the key role plain vanilla long only funds will ultimately play in dictating price action if selling momentum increases as we roll into 4Q09 (will they buy on the way down or turn sellers?)…Wanted to throw out one more piece of the puzzle…Short sellers have been taken out on stretchers for months now….I know most have been burned to the point that they would rather short only on weakness than try to top tick this market and run the risk of getting steamrolled (again).

So my point here is if the snowball starts to roll down the hill with regard to sell momentum, and the shorts get in motion, what are there expectations for that trade?.....It seems to me that when you get smoked repeatedly with the same strategy, and that strategy finally starts to work, it is human nature to close out the trade too early and lock in your profit, because you just want to right (I am certainly guilty of that on a personal level)…

And not sure that is all that atypical…So what am I saying here?...I think if this market does come off, short covering should come into play maybe a bit earlier than it would normally, thus stemming the down move (at least initially)….Combine that with a 6 month uptrend which has been firmly entrenched, and I think you could certainly make the case the above scenario might take place…

Although it appears that most of the heavy bleeding in the unemployment picture in the US is behind us, the #’s just don’t paint any kind of picture the biggest problem plaguing this economy has abated…The ADP # yesterday still demonstrates that people are losing their jobs at a pretty healthy clip…And the other huge missing piece of the puzzle (the actual hiring of people) still seems like it is very far away….In fact, I saw something the other day that illustrates this point pretty well…The Robert Half Financial Hiring Index says that 84% of CFOs surveyed have no plans on hiring for the rest of 2009….4% expect to add staff, and 10% see more cutbacks (actually up from 8% from the last survey)….Look out for initial claims out @ 8:30 (consensus is 565k, and consensus for continuous claims is 6.125mil), followed by the ISM non manufacturing out @ 10:00 (consensus is 48).

Source: Kaufman Bros.

More Americans Than Anticipated File Jobless Claims

"Sept. 3 -- More Americans than anticipated filed jobless-benefit claims last week, indicating companies remain focused on cutting expenses as the economy emerges from its worst recession since the 1930s.  

Applications fell by 4,000 to 570,000 in the week ended Aug. 29, exceeding the 564,000 median forecast of economists surveyed by Bloomberg News, figures from the Labor Department showed today in Washington. The total number of people collecting unemployment insurance climbed. 

“We’re not making much progress in terms of the layoff picture,” said Jonathan Basile, an economist at Credit Suisse Holdings USA Inc., which correctly forecast the first-time filings figure. “These levels of initial claims are still consistent with declines in payrolls.” 

Manufacturers are still cutting staff. Whirlpool Corp., the world’s largest appliance maker, will close its Evansville, Indiana, manufacturing plant, resulting in the elimination of 1,100 jobs as the housing slowdown hurts demand."  

Source: Bloomberg

Wednesday, September 2, 2009

Private sector sheds 298,000 jobs in August: ADP survey

"WASHINGTON -- Employment in the U.S. private sector fell by 298,000 in August, according to the ADP employment report released Wednesday. 

The drop suggests nonfarm payrolls may sink by more than the 250,000 anticipated by economists ahead of the government's much-anticipated report due out Friday morning."

Job creation is a problem right now. Especially, when a majority of the businesses in the United States are small businesses. With trouble attaining credit and capital to fund and expand their businesses, or even to have it stay afloat job growth will continue to be a problem.

With further job losses and unaccounted for discouraged workers, and part-time workers in the fold, this economy will not rebound at a staggering pace any time soon.  I look forward to Friday's numbers.

Source: marketwatch

Tuesday, September 1, 2009

Job Losses Are Not The Problem

"The fact is, job creation and job destruction take place during booms at rates that are not dramatically different from the rates during recessions. It’s just the difference between the two that changes. In a typical boom quarter, about 7 million jobs are destroyed, and about 8 million are created. In a typical recession quarter, about 8 million are destroyed and about 7 million are created. There just isn’t much support for the idea that recessions give us a special ability to reallocate resources more intensely than we do during a boom or a period of normal growth. “Creative destruction” is a dynamic process that continues all the time, not one that occurs in separate phases of creation and destruction."


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