A certain group of stocks has been doing rather well lately, at least stock price-wise. Manpower
Well, these companies are in the employment-services industry. They get called when other companies need warm bodies to do various tasks. The fact that they've been on a roll suggests that the job outlook in our great nation may be improving. Of course, to some degree, the price surges can also be explained simply by ungrounded investor enthusiasm and hopefulness, more than by concrete evidence of strong job growth.
What is the current job growth situation in our economy? Well, it's somewhat mixed, but there's reason to be hopeful. According to the Labor Department, there were many more jobs created in March than had been expected -- 308,000, to be roughly precise. As a counterpoint, a CBS MarketWatch article noted, "The average number of new claims for state unemployment benefits over the past four weeks rose by 2,250 to a seven-week high of 347,000." Still, a Reuters story reports that per Challenger, Gray & Christmas, corporate "planned job cuts fell in March to the lowest level in nine months." Some sort of recovery does seem to be at work.
Employment-services firms, many of which offer temporary employees ("temps") to companies, stand to benefit even as permanent jobs are created, because companies will often hire temps for a while as business heats back up. The upside for these firms is that they can delay having to begin paying for benefits for full-fledged employees -- at least, until they're more confident about their industry's recovery.
It's not too late to invest in many of these firms, but do your homework first. As well as you can, determine which ones have the strongest competitive positions, the least debt, the most cash, the fastest growth rates, the most straight-talking management, the most reasonable valuations, and the most potential for further growth. Discuss these companies or see what others are saying about them on our discussion boards -- we're offering a free 30-day trial of our boards right now.
Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article.