Inflation

I haven't seen much of a change in terms of the short-term trends in terms of employment in the US.

However there was an interesting video clip from MSNBC. Inflation will rear its head throughout this year unless the money printing across the world is contained.

www.msnbc.msn.com/id/21134540/vp/41414080#41414080

Scammers target desperate job seekers

There is an interesting article from the Los Angeles Times regarding scams in this difficult work environment.

http://www.latimes.com/business/la-fi-job-scams-20101024,0,2286668.story

So be careful when seeking something that maybe too good to be true.

Jobless Update

Here's a great look at what the offical numbers tell in terms of job losses in the United States.

http://online.wsj.com/article/SB10001424052748703946504575470001733933356.html?mod=e2tw

Sector Updates

With recent release of 2Q 2010 earnings, I've like to touch on a few points.

It was good to see that revenue ticked up for most of these corporations. Although, I'm still cautious with the early developments of austerity measures in Europe, and the looming regulations and tax regulations in the United States, revenue did improve for the staffing sector.

Profitability does leave something to be desired, until there robust action in terms of revenue that is sustained in a normalized recovery, I am cautiously optimistic on the sector.

June 2010 Unemployment 125,000 Shed

The US continues to face challenges in its labor markets.

125,000 jobs were cut. While the private sector added a less than robust 83,000 jobs. Consensus estimate were for the creation of 110,000 jobs in the private sector.

Over 652,000 people left the labor force.

Average work week hours also declined, from 34.2 to 34.1 hours worked.

The economy continues to experience significant headwinds with cuts from the delayed decision of extended unemployment benefits, to the possible future austerity measures that the US may follow the rest of the world. Time will tell if there will be another jobs bill to stimulus the sluggish recovery.

2009 Unemployment Duration in the United States by State

From the NY Times, unemployment duration in the United States by state. Still a very difficult climate for hiring in the United States.

Italy Facing Persistent Unemployment If Recovery

Bank of Italy governor Mario Draghi warned in a key speech Monday that unemployment in the country is likely to stay persistently high as economic recovery remains slow.

He said the financial crisis had weighed disproportionately on young people. Unemployment in Italy, for people between the ages of 20 and 34, reached an average of 13% in 2009, he said.

The national rate is 8.6% in March.

Starting-level salaries haven't changed much in 15 years, he added.

"A slow recovery increases the probability of persistent unemployment", Draghi said. "This condition, especially at the beginning of a professional career, tends to be associated with permanently lower salaries in the future".

Source: Dow Jones Newswire

RBS analyst Bob Janjuah states his views

RBS analyst Bob Janjuah was quite temped in his views of the global growth story.

Bob Janjuah states that a massive turnaround in corporate behaviour in leverage, capex, investment, hiring and spending binge is extremely unlike for now and for the rest of this year.

This is a pretty honest assessment after all the rose colored glasses calls of a buoy hiring landscape for the staffing firms. However, premenant placement has barely budged from historical levels, and consumers continue to be selective on their purchasing behavior.

The U.S. also revised its GDP downwards to 3.0% rather than bullish estimates from firms such as Goldman Sachs of 3.7%. Besides that unemployment claims also missed estimates.

May 15 2010 Unemployment Survey Week

With today's release of the unemployment claims for survey week May 15, 2010, claims were above consensus.

471,000 vs. expectations of 440,000.
Continuing claims were also above expectations 4,625,000 vs. expectations of 4,610,000.

Unfortunately, unemployment claims will continue to rise. With the Census staffing most probable ending June 30, 2010 expect a dramatic uptick in weekly claims, and continuing claims.

Besides that business confidence, and continued worries in the Euro Zone, and the lack of collective reasoning in Europe may possibly spread and cause significant slowdowns across major regions of the world.

I have touched on this mainly on Robert Half International's largest segment is the United States , however other staffing groups have also seen very minimal uptick in hiring compared to historical rebounds in the economy. I remain very cautious, and a decline in the economy is more than probable at this point.

Source: DOL

http://www.dol.gov/opa/media/press/eta/ui/eta20100682.htm

Employment Trend Index rises - April 2010

The recovery in the labor markets is broadening out, according to a report released Monday by the Conference Board.

The board said that its April employment trends index increased 0.9% to 94.7, from a revised 93.9 in March, first reported as 94.4. The index has risen for eight consecutive months and is up 7.1% from a year ago.

The ETI report follows last Friday's government employment release that showed nonfarm payrolls increased 290,000 last month.

Despite that strong job gain, the board remains cautious about the jobs outlook.

"The employment trends index continued to rise in April, but its rate of growth has slowed in recent months," said Gad Levanon, associate director.

Source: Dow Jones Newswire

Robert Half RHI Q1 2010 Earnings

Robert Half International (RHI) reported Q1 2010 earnings. Robert Half International reportedly missed earnings of .05 vs. analyst estimates of .06.

Revenue was also light of estimates. Q1 2010 revenue $737.2M vs. analyst consensus of $750.76M. Robert Half International although it sustained through the down draft of the financial crisis continues to face slack demand in all components of the company.

When valuations have risen as fast as they have, and demand has been lukewarm from the cyclical bottom, these temporary, and staffing firms continue to produce fairly weak margins.

I continue to see this sector as overvalued relative to the S&P's earnings.

Manpower MAN 2010 Q1 Earnings

Manpower recently reported 2010 Q1 earnings.

Manpower beat the estimates as an analyst from S&P raised their estimates. While Manpower lowered their estimates for the next quarter to set the bar lower ahead of it's acquisition of COMSYS.

The problem with the the increase is primarily the continued weak profitability in Manpower's numbers.

Operating margins in all regions experienced flat to slightly negative operating margins.

With the increase in revenue growth all MAN managed was sub two million in profits. If there is any downturn, and a majority of the analysts have not priced in what a Greece, and PIIGS default would cause to Manpower's underlying business with a bulk of their revenue coming from the European nations. Out of all the majorly traded staffing firms on the NYSE, MAN has the most underlying risk with such a sizable stake of it's business from Europe.

France has a large stake of its bonds in Greece, with over 700+ billion. If Greece were to continue to find itself in limbo, France may find it's own economic growth in jeopardy.

Small businesses don't see recovery panning out

NFIB index dipped from 88 to 86, and has been below the 90 level for 18 consective months.

"According to the NFIB's latest survey, most owners think business conditions will not improve in the next six months, few are hiring, and fewer than usual are investing in their business. "

Source: http://www.nfib.com/tabid/565/Default.aspx?cmsid=51254

Unemployment Rises in 27 States, Drops in 7 States February 2010

Twenty-seven states recorded over-the-month unemployment rate increases, 7 states and the District of Columbia registered rate decreases, and 16 states had no rate change, the U.S. Bureau of Labor Statistics reported today.

Over the year, jobless rates increased in 46 states and the District of Columbia
and declined in 4 states. The national unemployment rate in February, 9.7
percent,remained unchanged from January, but was up from 8.2 percent a year
earlier.

Mish had an interesting piece on the unemployment picture in the US. Although, the employment picture has mildly risen from the bottom, unemployment continues to remain at elavated levels.

Source: Mish Economic

Manpower (MAN) Staffing Updated Valuations March 2010

After pouring over some of the recent competitors and Manpower's latest earnings. Some of the metrics has changed, and some metrics still remain fairly cautious sign of the state of affairs with Manpower.

As Manpower has increased their earnings, valuations have come down. However risks are abound.

I'll provide some near term pros and cons of the stock, please do your own research, as this is not a recommend for the purchase or sale of the securities. I'm only providing my own research.

+ Near term improve in debt. Debt levels has narrowed to 757 Mil.
+ The pending acquisition of IT provider Comsys.

While there are some positive catalyst in places, risk still remains.

-While I am positive on the acquisition of Comsys, Manpower's ability to generate return on invested capital has been very limited. Manpower's return on invested capital is 0.92.
- Weak staffing levels in Europe, with risks associated with the Euro and the debt crisis which risks growth in the European Union. This remains a wild card as analysts from what I've read have not priced the risk of a currency implosion by the Euro. With the IMF, and non bipartisan support through the EU, Manpower's largest industrial partners France and Germany will be somehow affected longer term by the turmoil within the PIIGS. Risks either due to spending cuts, reduced spending by consumers, and increased debt obligations by specific countries.
- Continued pressure on valuations near term with MAN trading at 82.6x earnings, while the S&P500 trades at 11.7, historically MAN trades at a historical p/e of 29.0.
- PEG continues to trade well over one, and has risen back to 5.51.

Two worrisome metrics that continue to place MAN at risk, as business continue to face hurdles:
Historic trends of MAN receiving payment are at elevated levels:

- Days Sales Outstanding

Year

2000 67.2
2001 69.9
2002 71.1
2003 72.3
2004 71.4
2005 73.0
2006 73.2
2007 74.0
2008 68.7
TTM 83.8

- Days Inventory Payable Period

Year 2000 17.4
2001 17.9
2002 17.4
2003 18.2
2004 18.7
2005 19.1
2006 19.9
2007 20.9
2008 20.1
TTM 28.8

As stated there continues to be risk as MAN is having difficulty collecting payment compared to historic levels. I continue to be cautious as Manpower continues to face hurdles within its largest market (France), and pressure with labour regulations and unions in Europe.

The increasingly likely bailout of Greece, and possibly Portugal will have ramifications throughout the EU. The EU has historically been one of the slower growth areas in the global arena. With these spending and debt restructuring Manpower faces increased challenges, even as the global economy bounces from the bottom.

US Small-Business Optimism Falls FEB 2010

Small-business owners in the U.S. turned slightly more pessimistic in February, although employment readings--from the U.S.'s main source of new jobs--grew a shade more positive.

The Small Business Optimism Index lost 1.3 points to 88.0 last month, reported the National Federation of Independent Business in a press release Tuesday.

The NFIB noted that only two of 10 components posted gains last month.

The subindex covering expected business conditions dropped 10 points to a -9 reading, and sales expectations dropped 3 points to zero.

The NFIB said that owners complained "poor sales" was their top problem.

Source: Dow Jones Newswires

Jobless Claims Rise to 496,000 February 2010

This has been the second consecutive week where jobless claims has risen. This week the jobless claims has risen to 496,000 from 474,000 week ending in February 20. Jobless claims continues to face challenges compared to the consensus. There has been no reason to believe that job creation will happen in an instant. That's part of the reason for this blog to outline that the economy will take years for it to change its ways for a number of reasons.

Chart Source: BetaInvestment.com

Dark clouds hang over U.S. small businesses

"Small business owners entered 2010 the same way they left 2009 -- depressed," the group said, noting its Small Business Optimism Index reading for January was still below the 90 mark, the dividing line between positive and negative outlooks."

"In January, small businesses had to cut prices despite tangling with inflation while profits remained weak, according to the survey of the federation's 2,114 members."

"There are "still more owners planning to reduce stocks than planning new orders," the group found."

Source: Reuters


Remember that small businesses generate most of the job creation in the United States.

Even as a number of temporary help providers have exceeded estimates, there still continues to be lax growth in sales.

Monster, Inc. announced a large acquisition of Hotjobs which I am not a fan of. They seem to have overpaid for the Hotjobs property even though it is under the price of the prior bidding war with Yahoo.

In the near term there should be underlying risk for these companies as the stimulus and low interest rates start to fade with increased regulations and reform.

Manpower Q4 2009 / Year Earnings

Manpower released their earnings this morning. They beat their 4th quarter earnings with an EPS of .48 vs .24. Revenue also beat with revenues coming it at 4.412 Billion vs. estimates of 4.160 Billion.

Estimates beat and revenue Delcine have narrowed, although still down.

Q1 2010 guidance of -.05 to -.15 vs. estimates of -.06.

After looking at today's news on Manpower it seems to be a mixed bag. I'm fairly favorable to their new acquisition of COMSYS IT Partners, Inc. The acquisition will allow MAN to jump start their sales growth. However this will come at the cost of their already ballooning debt levels. As long as MAN can improve on this cash flow then their debt will be manageable. Any downturn and MAN will continue to face challenges to its debt levels as Moody's had suggested a number of months ago.

In terms of their earnings which may be muted due to flat to slightly positive growth in their European markets. There are lots of risk involved in their European markets, especially if the PIIGS creates currency instablity for Europe. One risk that underlines this issue is a possible bailout by the IMF, or by France (Manpower's largest market) and Germany. If this situation comes to roost then the European economy may face significant hurdles. And cap privatization growth in France and Germany (Europe largest industrialized nations). While US markets continue to face challenges as taxation and reform will continue to put pressure on hiring. Slack demand has lessen any likelihood of a V shaped recovery.

Valuations will be the next topic of concern for Manpower's, even as revenue dropped less than expected year over year.

The Coleman Group Morgan Stanley Burlingame

It is interesting to see how internal departments facilitate operations. While looking at some of the lack of coordination and acumen with fellow employees. I feel an environment that does not communicate, and presents a power struggle is a counteractive environment. Until this group can resolve its internal issues I would not recommend leaving my capital under their supervision.
There is an unbelievable lack of over site from the upper level management which causes friction with lower level employees. There were already enough issues with the firm and its auction preferred shares, and the liquidation process. There is a manta that states, "When in doubt, stay out". And as I've seen that if management continues to live in a bubble, they will continue to lose revenue streams to their competitors.