Analyst Downgrades Staffing Firms; Wage Pressures Eased in Q3

Shares of Manpower and Robert Half International declined Tuesday after Morgan Stanley downgraded both companies’ stocks.

In a research note, a Morgan Stanley analyst downgraded Manpower to “Equal Weight” from “Underweight” and said it “is trading modestly above its intrinsic value.” In addition, the analyst said growth in Europe may hold up but said the “U.S. macro environment is a bit soft, with plenty of forward-looking uncertainties, especially related to housing, consumer confidence, and therefore labor markets. This is especially true on the manufacturing side of the economy, and particularly with auto manufacturers.”

(Also on Tuesday, Manpower subsidiary Right Management Consultants, Inc. completed the acquisition of Grow Talent Co. Ltd., an organizational and individual consulting firm with offices in New Delhi, Mumbai, and Bangalore.)

The analyst downgraded Robert Half International to “Equal Weight” from “Overweight,” citing a softening housing market and sluggish consumer confidence, which “reduces the visibility regarding macro prospects.”

However, the analyst said Robert Half is still “one of the best positioned and best-managed temporary staffing companies in the world, as evidenced by the company’s track record of high organic revenue growth, industry-leading margins, and excellent free cash flow.”

Manpower dropped $1.16 to $71.70, while Robert Half International shares lost 98 cents to $37.42. Also on Tuesday, Labor Ready, Inc. lost 7 cents to $19.32. All three companies are traded on the New York Stock Exchange.

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Over on the Nasdaq, Paychex, Inc. lost 21 cents to $39.47; Kelly Services, Inc. declined 13 cents to $29.49; and Monster Worldwide lost 30 cents to $42.40.

Government: Wage Pressures Eased

A new government report says wage pressures were eased in the third quarter. The Bureau of Labor Statistics reported unit labor costs, which measure the impact of wages and benefits per unit of output, grew at an annual rate of 2.3% in the third quarter, which was less than the 3.8% estimated rate the department released last month.

However, the productivity of U.S. workers rose by a weaker-than-expected 0.2%.

Elaine Rigoli has nearly 15 years of experience managing content and community for various B2B and consumer websites. Elaine has written thousands of business and technology articles and has been quoted in The Wall Street Journal and eWeek, among other publications.


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