The labor market showed no signs of cooling, with American businesses recording strongest jobs growth in a year and a half in February. Job additions were broad-based, with both blue collar and white collar industries hiring people in February.
Warmer-than-normal weather conditions drove hiring nearly across the board last month. Meanwhile, a harsh winter had kept thousands of people at home in the prior month. U.S. employers have also ramped up hiring in anticipation of a business-friendly tax reform. Modest wage growth also cooled down fears of inflation and rate hikes that had kept employers on the toes for quite some time.
As U.S. employers are on a hiring spree, staffing companies stand to gain the most. Thus, investing in some doesn't seem to be a bad proposition.
American Business Houses on a Hiring Spree
American businesses are on a hunt for employees and the headline number is pretty encouraging. According to the Labor Department, the U.S economy registered 313,000 job additions in February, the strongest gains since July 2016. The job addition blew past the consensus expectation of 208,000.
February, in the meantime, marked the 89th successive month of job additions, the longest streak since the Labor Department started tracking this data in 1940s. Job additions in January and December also came in much stronger than earlier reported. Altogether, the economy added an average of 242,000 jobs in the past three months. That's more than the first three months' average of 182,000 in 2017.
February's rise in nonfarm payrolls means that the labor force participation rate, which reflects Americans looking for jobs or those working, has spiked 0.3 percentage points to 63%. This turned out to be the best one-month gain in almost eight years when the U.S. economy has been recuperating from the Great Recession.
Gad Levanon, the Conference Board's chief economist added that if people in their prime working age (25 to 54) is considered, the participation rate is even higher at 82%. That's the best reading since 2010.
While more number of people entering the labor force showed immense sign of confidence in the labor market, the jobless rate remained at a 17-year low of 4.1%.
A Flurry of Job Hunters, Industries Lead the Way
Most of the traditionally blue collar and white collar industries hired last month. Blue collar industries are mostly led by construction companies. Such companies filled 61,000 positions, while manufacturing sectors hired 31,000. Even mining, which is known as a job-losing industry of late, added 9,000 workers.
Hiring in the retail segment, in the meantime, has been promising. Retailers added 50,000 jobs, as did professional and business services that includes lawyers, accountants and advertising and marketing people, to name a few.
The financial service sector, in the meantime, filled 28,000 jobs. The gains were mostly led by the insurance industry, while commodities contracts, securities and investment businesses showed solid gains.
5 Top Staffing Stocks to Buy Now
The latest job numbers bode well for staffing companies. Additionally, the Conference Board's Employment Trends Index, stands at 106.93 in January, up from 106.59 last December. When compared to the year-ago level, the index jumped 5.4%. Gad Levanon added that "a strong US economy provided additional tailwinds to employment growth, bringing down the unemployment rate even further and encouraging more men and women to join the labor force."
The buoyancy in the staffing space is further confirmed by its solid Zacks Industry Rank in the top 12%, 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.
We have, thus, selected five staffing stocks that boast a Zacks Rank #1 (Strong Buy) or 2 (Buy) and are positioned to grow in the near term. The search was also narrowed down with a VGM Score of A or B. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners.
TrueBlue, Inc.TBI provides contingent staffing, recruitment process outsourcing, and contingent staffing management services. The company has a Zacks Rank #2 and a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings increased 18.8% in the last 60 days. The company's expected growth rate for the current year is 27%.
ManpowerGroup Inc.MAN provides workforce solutions and services in the United States and internationally. The stock has a Zacks Rank #2 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings jumped 13.4% in the last 60 days. The company's expected growth rate for the current year is 27.3%.
Insperity, Inc.NSP provides human resources and business solutions to enhance performance of small and medium-sized businesses in the United States. The company has a Zacks Rank #2 and a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings climbed 14.7% in the last 60 days. Insperity's expected growth rate for the current year is 24.1%. You can see the complete list of today's Zacks #1 Rank stocks here.
On Assignment, Inc.ASGN provides professionals for contract, contract-to-hire, and direct hire assignments in the United States. The staffing firm has a Zacks Rank #2 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings rose 17.9% in the last 60 days. The company's expected growth rate for the current year is 23.3%.
Kforce Inc.KFRC - a Zacks Rank #1 company - provides professional and technical specialty staffing services and solutions in the United States and internationally. The stock has a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings rose 21% in the last 60 days. The stock's expected growth rate for the current year is 35.7%.
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