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5 Staffing Stocks to Gain From Healthy Labor Market

Record low jobless claims for the week ended Jan 19 indicated a tight labor market despite a prolonged government shutdown that entered its 35th day.

A significant number of new job additions also point to hearty hiring, which could help put aside investor fears stemming from predictions of a sharp global economic slowdown. Therefore, at this stage, it would be prudent to keep some staffing stocks in focus that could benefit from a strong labor market.

Least Initial Jobless Claims Since November 1969

The U.S. economy is facing several bottlenecks such as uncertainty over trade talks and slowing global economies. Although these factors are hurting business and consumer confidence, a high number of workers is still entering the workforce, indicating a healthy labor market.

The number of Americans claiming unemployment benefits unexpectedly fell to a near five-decade low for the week ended Jan 19, sliding to 199,000 from the revised level of 212,000 for the week ended Jan 12. Economists polled by Reuters had expected jobless claims to increase to 220,000.

The four-week moving average of initial claims (which smoothens out the week-to-week volatility in data and therefore better reveals labor market trends) also fell to 215,000 last week, the lowest since early November.

White House economic advisor Larry Kudlow noted that low initial jobless claims report might point to strong January job additions.

"It suggests very strongly that the jobs report for January, which will come out the week after next, will be up," Kudlow told Fox News. He added, "It also suggests - as almost every other data point suggests - that the economy is very strong."

Strong December Non-Farm Payroll Report

The least initial unemployment benefits' claims noted last week followed an encouraging December non-farm payroll report.

Per the Bureau of Labor Statistics, the U.S. economy added 312,000 new jobs last month, beating analysts' estimates of 182,000. Job additions were broad-based and industries such as health care, manufacturing, construction, and food services and drinking places gained significantly.

Although the jobless rate also inched up from 3.7% in November to 3.9% in December, it still hovers around historically low levels, per a National Conference of State Legislatures report .

Payroll growth, in the meantime, amounted to 2.6 million last year, the highest since 2015 and considerably surpassed 2.2 million in 2017, a CNBC report cited.

5 Staffing Stocks to Benefit From Healthy Labor Market

Staffing companies are often direct beneficiaries of new job additions and fresh recruitments. The buoyancy in the staffing space is further confirmed by its solid Zacks Industry Rank in the top 37%, indicating continued hiring and more job opportunities. In fact, the top 50% of Zacks Ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.

Therefore, we have selected some staffing companies for you to add to your watch-list as these are well-positioned for gains.

Resources Connection, Inc.RECN offers business consultation services under the name Resources Global Professionals in North America, Asia Pacific and Europe. The company carries a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for the company's current-year earnings has advanced 14.9% over the past one month. You can see the complete list of today's Zacks #1 Rank stocks here .

Resources Connection's shares have gained 16.8% on a year-to-date basis against the S&P 500's increase of 5.3%.

Korn FerryKFY offers talent management services globally. The company carries a Zacks Rank #2 (Buy) and the Zacks Consensus Estimate for its current year earnings has advanced 1.8% over the past two months.

Korn Ferry's shares have gained 12.2% on a year-to-date basis.

BG Staffing, Inc.BGSF offers temporary staffing services in the United States. The company carries a Zacks Rank #3 (Hold) and the Zacks Consensus Estimate for BG Staffing's current-year earnings has advanced 4.3% over the past three months.

BG Staffing's shares have added 9.5% on a year-to-date basis.

TrueBlue, Inc.TBI provides recruitment process outsourcing, staffing and staffing management services in the United States, Puerto Rico and Canada. The company carries a Zacks Rank #3 and the Zacks Consensus Estimate for its current year earnings has advanced 1.3% over the past three months.

TrueBlue's shares have gained 8.8% on a year-to-date basis.

Insperity, Inc.NSP offers human resources and business solutions to small and medium-sized companies in the United States in order to improve their business performance. The company carries a Zacks Rank #3 and the Zacks Consensus Estimate for the current year has advanced 5.4% over the past three months.

Insperity's shares have gained 11.1% on a year-to-date basis.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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