Staffing Industry Up 30.4% in Past 6 Months: Stocks in Focus


The staffing industry was badly hit by the coronavirus pandemic. However, certain tailwinds have led to renewed enthusiasm among investors lately, which can be gauged from the fact that the Zacks Staffing industry has gained 30.4% in the past six months, handily outperforming the S&P 500 Index’s 27.4% appreciation and 20.9% rally of the broader Zacks Business Services sector.

 

The gradually recovering U.S. economy, backed by upbeat manufacturing and non-manufacturing activities, is aiding the staffing industry as evident from the additional hiring and wage increase.

Numbers That Validate This Growth

Notably, the U.S. economy added 1.4 million jobs in August, with the unemployment rate coming down to 8.4% from 10.2% in July and 11.1% in June. The unemployment rate declined by 1.8 percentage points in August and the number of unemployed persons fell by 2.8 million to 13.6 million. Both the metrics reflected a downside for the fourth straight month.

The labor force participation rate grew by 0.3 percentage point to 61.7% and the employment-population ratio surged 1.4 percentage points to 56.5% in August.

Notable job gains have been witnessed in retail trade, in professional and business services, in leisure and hospitality, and in education and health services.

Average hourly earnings in August increased 11 cents to $29.47, registering a 4.7% year-over-year increase. Average work week rose by 0.1 hour to 34.6 hours.

Transitions Within the Industry

The pandemic has led to an abrupt shift in recruitment patterns within the staffing industry. While coronavirus-induced lockdowns have resulted in unproductive units in several industries, prompting companies (especially in the aviation, travel & tourism, hospitality, manufacturing, automotive, media, and entertainment sectors) to reduce their temporary staff to put a check on operating costs and expenses amid market uncertainties, sudden spike in hiring for essential services like e-commerce, logistics (package/freight delivery, hyper-local delivery), healthcare and information technology has been witnessed.

Additionally, a number of temporary employees are also being employed across retail, co-operative and agricultural operations, including the distribution of food, milk, groceries, vegetables, under different job roles ranging from delivery boys, supervisors, drivers, customer care.  Other essential services involve workers engaged in manufacturing and distribution of PPEs, and employees in banks, ATMs, telecom and Internet services.

Remote working model is leading to cost savings for many firms by bringing down their spending on real estate and reduction of business travel.

Staffing companies are also finding new opportunities with digitization of the workforce and demand for software-as-a-service (SaaS) solutions to meet new challenges in the current scenario.

6 Staffing Stocks That Warrant a Look

Over the past six months, six major staffing companies have had an impressive run on the bourse. Insperity Inc. NSP, Robert Half International Inc. RHI, Manpower Group MAN and Kelly Services, Inc. KELYA have gained 75%, 39.3%, 36.7% and 33.1%, respectively. Kforce Inc. KFRC and BG Staffing, Inc. BGSF have rallied a respective 27% and 16.1%.

BG Staffing sports a Zacks Rank #1 (Strong Buy), while Kforce is Zacks Rank #2 (Buy) stock. The remaining companies mentioned herein carry a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank stocks here.

The chart below shows the price performance of six staffing stocks compared with the industry, the Zacks S&P 500 composite and the broader Zacks Business Services sector in the past six months.

 

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ManpowerGroup Inc. (MAN): Free Stock Analysis Report

Kelly Services, Inc. (KELYA): Free Stock Analysis Report

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Robert Half International Inc. (RHI): Free Stock Analysis Report

BG Staffing Inc (BGSF): Free Stock Analysis Report

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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.

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