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A Compass for Jobs Recovery

By Rick Steier – Updated Apr 6, 2017 at 12:15PM

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Keep an eye on staffing companies to gauge the employment picture.

As President Obama motored into Buffalo, N.Y., this past week, he was greeted with a big sign that read: "Dear Mr. President, I need a freakin' job. Period." That sign tells a story, but investors need more than anecdotal evidence about how the economy is doing.

Here's a tip: Keep tabs on companies that supply staff for other companies.

Robert Half International (NYSE: RHI) has been staffing workers in a variety of sectors for more than 60 years. It now reaches into financial services, office personnel, technology, legal, creative, and management fields. You don't have to be Spock to believe that an uptick in Robert Half’s placement of workers might signal the beginning of a jobs recovery.

In this quarter's conference call, Robert Half execs opined that they saw a sizable uptick in placing permanent workers because small businesses realized they had cut too deep and needed to hire folks back. (Investors should always listen to or read transcripts of a company's quarterly conference calls, because they provide more color than the 10-Q filed with the SEC.)

Fools interested in keeping tabs on job recovery should focus more on permanent hires, although keeping an eye on temporary hires can be useful. As noted in the conference call, companies may start by hiring temps before committing to permanent employees to make sure they do not re-staff too quickly.

Investors interested in staying ahead of the curve should follow other companies, too. More jobs mean more product demand, which means more sales, which means earnings recovery. Keep an eye on Manpower (NYSE: MAN), as it has a broader international presence than Robert Half. Kelly Services Inc. (Nasdaq: KELYA) staffs a broader range of domestic industries than Robert Half. With these three, you'll get a good snapshot of how the freakin' job market is behaving.  

Rick Steier does not own shares in any company mentioned. The Fool's disclosure policy signs autographs on the weekends.

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Stocks Mentioned

Robert Half International Inc. Stock Quote
Robert Half International Inc.
RHI
$73.63 (0.66%) $0.48
ManpowerGroup Inc. Stock Quote
ManpowerGroup Inc.
MAN
$65.34 (-3.14%) $-2.12
Kelly Services, Inc. Stock Quote
Kelly Services, Inc.
KELYA
$13.72 (-0.65%) $0.09

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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