Manpower 3Q 09 better then expected; 4Q 09 Warning

Manpower reported earnings .09 better then First Call estimates, and revenues fell 26.0% year over year at $4.19 billion versus 3.95 Billion consensus.

Manpower issues downside guidance for the 4th quarter. It sees EPS of .17 - .27 vs. .28 consensus.

"We continued to experience sluggish demand for our services as the labor markets throughout the world were hampered by lack of demand for companies' products and services."

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Pretty lackluster report. Margins was lower then anticipated, cost controls were not as strong as they could have been. Debt continues to restrict MAN from making sound investment.

Took some one time charges, which wasn't advantageous to their bottom line.

Guidance was very weak compared to the comps, which I have been very vocal that even after today's drop in stock price is dramatically overvalued.

-Dividend.com advised it's readers to sell prior to earnings.

-S&P Research advised its clients to sell MAN, after Manpower announced its earnings.

Near term this stock should continue to fall, as their just reported quarter is historically their strongest of the year. The 4th qt. may become seasonally weak, which they have already warned in their guidance. Guidance was extremely disappointing considering that most analysts had very tepid estimates, and didn't raise much in terms of their estimates as Manpower's stock appreciated. Still MAN is having continued operating problems. Since 2007, its earnings, net income, and EPS has declined year o/ year.

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 

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

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."

Double Dip Recession?

“There is a real danger this is going to be a double dip and that after six months or so we’ll have some more bad news,” Feldstein, the former head of the National Bureau of Economic Research and Reagan administration adviser, said today in an interview on Bloomberg Television. “We could slide down again in the fourth quarter.”

"The economy could “flatten out” or “even be positive” in the third quarter, and then it’s likely to contract again in the last three months of the year as the effects of the federal stimulus program wear off and companies finish rebuilding inventories, he said.
“There isn’t going to be enough to sustain a really solid recovery,” he said, even though recent data has provided some “good news” on the economy."

Source: http://www.financialsense.com/Market/wrapup.htm

NYC Unemployment Hits 9.5%

Reported from the nydailynews:

"The jobless rate in New York rose to a 12-year high of 9.5% last month, equaling the nationwide rate for the first time in the recession."

This is no surprise considering that the lost of jobs in the financial sector leads to declines in service jobs from the local bussers to the newspaper vendors down Main St. Lets wait and see what the backend sitmulus will do for this economy.

Source: http://www.nydailynews.com/money/2009/07/17/2009-07-17_jobless_rate_hits_95_here_12yr_city_high_matches_dismal_national_figures.html