Over the last 10 years the U.S. continued to decline to its current levels of no job growth.
This will continue to be the case until there is a fundamental shift in our workforce as it becomes more and more service oriented. Many of these manufacturing jobs have shifted overseas. While there continues to be weak demand by the consumer here which reduces any visablity for a longer term buoy economy.
Please check out the chart regarding the weak demand for temporary services.
Source: http://www.nytimes.com/imagepages/2009/08/07/business/20090808_CHARTS_GRAPHIC.html
Sunday, August 9, 2009
Friday, August 7, 2009
Manpower Valuation Analysis
With the recent run up in staffing firms lets look at the valuations of Manpower since it seems to be the most expensive based on P/E both current and forward P/E.
MAN earns an overbought score of 88 out of 99.
50 day moving average at 44.03.
P/E at 66.40.
I'm still trying to figure out how MAN valuation even when you take into account P/S that it is valued over the present analyst price target.
Moody's also put Manpower on credit watch as earnings have fallen through a cliff compared to last year. Although they can manage their debt in the short term with their cash pile, MAN will face continued challenges as other business service providers are more nimble to grow its business with Manpower's mounting debt.
I continue to like RHI (Robert Half International) as valuations are better poised to sidestep this continued credit crisis. The minimal debt is advantageous to RHI position in the near term.
I would like to see more stabilization on Manpower's larger revenue generating markets. Developed nations such as Australia continues to face a soft market. I would cut as much staff there, and / or hours till they see more short term demand. As it seems that they are not optimizing there team. At least MAN is aware that Australia is under performing. Hugging the bottom doesn't mean that there is job growth. Hence, the cautious approach with MAN's valuation.
MAN earns an overbought score of 88 out of 99.
50 day moving average at 44.03.
P/E at 66.40.
I'm still trying to figure out how MAN valuation even when you take into account P/S that it is valued over the present analyst price target.
Moody's also put Manpower on credit watch as earnings have fallen through a cliff compared to last year. Although they can manage their debt in the short term with their cash pile, MAN will face continued challenges as other business service providers are more nimble to grow its business with Manpower's mounting debt.
I continue to like RHI (Robert Half International) as valuations are better poised to sidestep this continued credit crisis. The minimal debt is advantageous to RHI position in the near term.
I would like to see more stabilization on Manpower's larger revenue generating markets. Developed nations such as Australia continues to face a soft market. I would cut as much staff there, and / or hours till they see more short term demand. As it seems that they are not optimizing there team. At least MAN is aware that Australia is under performing. Hugging the bottom doesn't mean that there is job growth. Hence, the cautious approach with MAN's valuation.
Canada employment still depressed
"Bucking predictions that the recession may have officially ended in July, Statistics Canada reported that Canada's labour market shed another 45,000 jobs as more people struggled to find work. It was a terrible month for the tourism sector and youth employment fell sharply from one of the worst summer job markets in decades.
The unemployment rate stayed at 8.6 per cent as discouraged workers appeared to leave the labour market and were not counted in the monthly tally from Statistics Canada.
Though the national unemployment rate was unchanged, one note of concern was that full-time employment and private sector jobs - the two most reliable indicators of labour market strength - both continued their downward trajectory.
"While a jobless recovery is possible, a job-destroying recovery isn't, since even if productivity gains allow it for a while, it leaves the household sector without the spending power to sustain it," wrote CIBC chief economist Avery Shenfeld.
"All told, these were much weaker numbers than anticipated."
"No one said it was going to be a smooth recovery, and especially not for employment," said BMO Capital Markets Economist Doug Porter.
Source: The Canadian Press
The unemployment rate stayed at 8.6 per cent as discouraged workers appeared to leave the labour market and were not counted in the monthly tally from Statistics Canada.
Though the national unemployment rate was unchanged, one note of concern was that full-time employment and private sector jobs - the two most reliable indicators of labour market strength - both continued their downward trajectory.
"While a jobless recovery is possible, a job-destroying recovery isn't, since even if productivity gains allow it for a while, it leaves the household sector without the spending power to sustain it," wrote CIBC chief economist Avery Shenfeld.
"All told, these were much weaker numbers than anticipated."
"No one said it was going to be a smooth recovery, and especially not for employment," said BMO Capital Markets Economist Doug Porter.
- (Previous month in brackets.)
-St. John's, N.L. 8.1 (7.6)
-Halifax 6.0 (5.9)
-Saint John, N.B. 5.0 (5.0)
-Saguenay, Que. 9.8 (9.2)
-Quebec 4.8 (4.6)
-Trois-Rivieres, Que. 8.3 (8.2)
-Sherbrooke, Que. 8.5 (9.1)
-Montreal 9.6 (9.5)
-Gatineau, Que. 5.4 (5.4)
-Ottawa 6.0 (6.4)
-Kingston, Ont. 7.2 (6.6)
-Toronto 10.0 (9.6)
-Hamilton 8.2 (7.1)
-Kitchener, Ont. 9.9 (9.9)
-London, Ont. 10.6 (10.4)
-Oshawa, Ont. 9.7 (8.7)
-St. Catharines-Niagara, Ont. 10.5 (10.9)
-Sudbury, Ont. 9.8 (8.9)
-Thunder Bay, Ont. 8.5 (8.8)
-Windsor, Ont. 15.2 (14.4)
-Winnipeg 5.3 (4.9)
-Regina 3.2 (3.4)
-Saskatoon 4.7 (4.6)
-Calgary 6.9 (6.6)
-Edmonton 7.0 (6.5)
-Abbotsford, B.C. 9.0 (8.2)
-Vancouver 7.0 (6.9)
-Victoria 6.1 (6.3)
Source: The Canadian Press
IBM union Layoffs could hit 16,000 by year's end
IBM is reducing headcount in the United States.
"This means that the best information on IBM's workforce reduction in the U.S. come from two sources: The company's own annual report, which shows the year-to-year changes in its U.S. workforce, and the Alliance@IBM.
The Alliance says it has counted about 184 employees who have been laid off in the most recent round of cuts, based on employee information packets it received so far. But it believes the number exceeds that, according to Lee Conrad, the union's national coordinator.
In January, Conrad estimated that as many as 16,000 employees may be cut this year and it's standing by that figure. Based on its count so far, at least 10,000 employees have already been culled from the workforce because of the recession and offshoring.
"It is not right that IBM continues to keep job cut numbers, locations and divisions secret," said Conrad in an email. "IBM needs to come clean on how many jobs are being terminated as the work is offshored. We call for full transparency." The Alliance@IBM is a Communications Workers of America local that doesn't have enough members to gain official recognition as a bargaining unit."
"This means that the best information on IBM's workforce reduction in the U.S. come from two sources: The company's own annual report, which shows the year-to-year changes in its U.S. workforce, and the Alliance@IBM.
The Alliance says it has counted about 184 employees who have been laid off in the most recent round of cuts, based on employee information packets it received so far. But it believes the number exceeds that, according to Lee Conrad, the union's national coordinator.
In January, Conrad estimated that as many as 16,000 employees may be cut this year and it's standing by that figure. Based on its count so far, at least 10,000 employees have already been culled from the workforce because of the recession and offshoring.
"It is not right that IBM continues to keep job cut numbers, locations and divisions secret," said Conrad in an email. "IBM needs to come clean on how many jobs are being terminated as the work is offshored. We call for full transparency." The Alliance@IBM is a Communications Workers of America local that doesn't have enough members to gain official recognition as a bargaining unit."
Structural Unemployment Worsens.
The number of people who've been out of work longer than six months soared by a record 584,000 to 5 million, accounting for more than a third of all unemployment for the first time on record.
This is an interesting situation. The unemployment rate ticked down, but that is discounting a large number of job seekers removed from the overall data. This removed about .2% to the overall unemployment rate. So although there was slight improvement in job losses, there continues to be elavated state of job losses.
Another problem is the number of hours worked. The average reported on Thursday is 33.1, a tick up of 400,000+ jobs. However the United States is still running at very low historical hourly work rates. This will lead to reduced spending, and cause retailers to hire as few workers as needed. This continued slow pace of added jobs will limit the amount of hiring that the private sector will employ.
Jobs data propel staffing stocks, risks remain
"Tig Gilliam, who heads North American operations for global staffing giant Adecco SA, said the industrial part of the temporary labor market normally rebounds strongly at the end of recessions, but he has not yet seen evidence of that.
Jobs associated with the physical supply chain will recover as inventories get run down and need to be restocked, Gilliam said, but he added:
"The only place we're seeing the reaction you'd expect there is in automotive, and what scares me is that's artificial. (The) cash-for-clunkers program accelerated demand in that segment."
Source: Reuters
Jobs associated with the physical supply chain will recover as inventories get run down and need to be restocked, Gilliam said, but he added:
"The only place we're seeing the reaction you'd expect there is in automotive, and what scares me is that's artificial. (The) cash-for-clunkers program accelerated demand in that segment."
Source: Reuters
Thursday, August 6, 2009
Prospects of a jobless recovery
From Kathleen Pender:
"The prospect of an economic recovery is growing stronger, but so are fears that unemployment could remain high for a prolonged period as it did during the previous two recessions.
If you are a U.S. manufacturer, you can't raise prices. The only way to increase profits is to cut costs," he says. One way to do that is to move production overseas.
Achuthan says that nonmanufacturing employment recovered quickly after the previous two recessions, but those gains were overwhelmed by job losses in manufacturing. "Ten years ago we had 18 million manufacturing jobs. Today we have 12 million.
What's different this time is that consumers, who are deeply in debt and have watched the value of their homes and investments plummet, might spend less than they normally would in a recovery, keeping a lid on job growth.
Another risk: Normally, when a recession includes a credit crisis, "the recovery is steep and drawn out," says Gary Schlossberg, a senior economist with Wells Capital Management. That suggests this recovery will be slow.
Economist Ed Yardeni expects "a very weak recovery in the labor market, even weaker than in the last recovery," he says.
Washington is throwing too many wrenches into the recovery mechanism. In the past it was simple: cut taxes and help the unemployed. We didn't use a recession to change all sorts of policies," such as health care, energy and union elections, he says. All this uncertainty could discourage hiring.
Yardeni also wonders "how we can have a sustainable recovery with the kind of deficits we are projecting. Normally deficits widen in recessions and narrow in recoveries. This time we are looking at structural deficits. That creates another layer of uncertainty."
"The prospect of an economic recovery is growing stronger, but so are fears that unemployment could remain high for a prolonged period as it did during the previous two recessions.
If you are a U.S. manufacturer, you can't raise prices. The only way to increase profits is to cut costs," he says. One way to do that is to move production overseas.
Achuthan says that nonmanufacturing employment recovered quickly after the previous two recessions, but those gains were overwhelmed by job losses in manufacturing. "Ten years ago we had 18 million manufacturing jobs. Today we have 12 million.
What's different this time is that consumers, who are deeply in debt and have watched the value of their homes and investments plummet, might spend less than they normally would in a recovery, keeping a lid on job growth.
Another risk: Normally, when a recession includes a credit crisis, "the recovery is steep and drawn out," says Gary Schlossberg, a senior economist with Wells Capital Management. That suggests this recovery will be slow.
Economist Ed Yardeni expects "a very weak recovery in the labor market, even weaker than in the last recovery," he says.
Washington is throwing too many wrenches into the recovery mechanism. In the past it was simple: cut taxes and help the unemployed. We didn't use a recession to change all sorts of policies," such as health care, energy and union elections, he says. All this uncertainty could discourage hiring.
Yardeni also wonders "how we can have a sustainable recovery with the kind of deficits we are projecting. Normally deficits widen in recessions and narrow in recoveries. This time we are looking at structural deficits. That creates another layer of uncertainty."
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