Manpower received a revised rating from Moody's

"Moody's Investors Service downgraded Thursday the long-term debt ratings of Manpower Inc. to Baa3 from Baa2, saying the staffing company's profitability is expected to weaken further this year amid the recession.

The ratings agency also said Manpower's ratings outlook is stable, based on anticipated year-over-year revenue and profit declines in the last two quarters of 2009, driven by continued sagging demand for permanent-placement and temporary labor.

Moody's said the ratings anticipate modest revenue and profit growth in 2010 as global economies stabilize.

"The downgrade of Manpower's long term ratings reflects Moody's expectation that profitability, leverage and interest coverage metrics will continue to weaken sharply during the remainder of 2009 and will not recover to pre-recession levels over the next two years," Lenny Ajzenman, Moody's senior vice president, said in a statement.

"Manpower derives the majority of its revenues from Europe and we expect labor market conditions to remain difficult in key European markets into 2010," he said.

Manpower reported a 27 percent organic constant currency revenue decline in the second quarter of 2009, though signs of stabilization appeared in key markets such as Italy, France and the U.S.

The agency said Manpower has $1.1 billion of cash and cash equivalents -- compared to $873 million of funded debt -- which gives the company a solid liquidity cushion during a cyclical trough in the staffing business.

It also said Manpower benefits from a leading global market position and trends that support the long-term growth of the staffing sector.

Moody's downgraded Manpower's senior unsecured notes of Euro300 million due 2012 and its senior unsecured notes of Euro200 million due 2013 to Baa3 from Baa2."

Source: AP

What recession?

Present economic conditions in the United States from Ritholtz:

• Unemployment has risen;
• Wages continue to slide;
• Industrial production has fallen every month;
• Deflation continues to stalk many asset classes;
• Credit availability is weak, lending standards are tight;
• Capacity utilization is at a very low rate of 68%;
• Retail sales (other than gasoline price increases) are soft

As stated the economic bottom hasn't been hit, and growth has been returning although at a very sluggish rate. Credit is still tight, hence the lack of private sector growth. Government spending can temporary provide a cushion against additional downside but it can not continue its debt ridden balance sheet.

Wages will continue to be under pressure as demand has not returned to from the 2007 peak. Hence the increase in savings and tepid spending by the consumer.