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Aug. 6, 2007, 11:59 p.m. EDT

Some Job-Related Stocks May Take a Break

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R.W. Baird & Co.

THE JULY EMPLOYMENT REPORT was somewhat weak. Employment growth is slowing with the moderating economy.

Nonfarm payrolls were up 92,000 (consensus was 125,000-130,000) to 138.1 million. Job growth slowed to 1.37% year over year, the slowest since July 2004. The unemployment rate increased 10 basis points to 4.6%.

The household data were weaker than expected -- down 30,000 jobs sequentially. Job growth was 1.2% year-over-year, consistent with June and the slowest since December 2004.

The report is consistent with signs of slowing from the Automatic Data Processing /zigman2/quotes/207661132/composite ADP +1.32% report and the Monster Employment Index. Clearly job growth is slowing/moderating.

Key areas of strength were education and health services (39,000 more jobs), leisure and hospitality (up 22,000), financial activities (up 27,000) and professional and business services (up 26,000).

As has been the case lately, construction (down 12,000 jobs) and retail (down 1,000) were weak and manufacturing declined by 2,000 jobs (13th month in a row of contraction). Government also fell.

Temporary-staffing employment declined for the sixth straight month (down 6,900) and was down 1.9% year-over-year. We attribute this to the weakness in manufacturing and clerical staffing (where the largest percentage of temps is employed).

Other forward-looking indicators were mixed-- average hourly work week declined 0.1 hours to 33.8 hours. Wage growth was benign and the diffusion index was positive increasing from 51.8 to 56.3.

The labor market remains tight by historical standards (especially for skilled workers) but did loosen slightly -- unemployment rate increased for people without a high-school degree (from 6.7% to 7.1%), compared to people with a high-school degree (from 4.1% to 4.5%).

The report is a negative data point for staffing companies focused on large domestic manufacturing concerns (such as Kelly Services /zigman2/quotes/200058584/composite KELYA +0.19% ).

It isn't a negative, but isn't a positive for executive search companies (Heidrick & Struggles International /zigman2/quotes/201335726/composite HSII +3.23% and Korn/Ferry International /zigman2/quotes/209856151/composite KFY -0.12% ), payroll processors (Automatic Data Processing, Paychex /zigman2/quotes/202030365/composite PAYX +0.76% and Ceridian /zigman2/quotes/209805368/composite CEN -0.53% ), and staffing companies focused on professional skills or permanent placement (Robert Half International /zigman2/quotes/209666445/composite RHI -0.19% , Kforce /zigman2/quotes/205691535/composite KFRC -0.65% , MPS Group, Hudson Highland Group, Resources Connection and Comsys IT Partners).

Monster Worldwide /zigman2/quotes/205899417/composite MNST -5.17% seems particularly sensitive to hints of macro slowing at this point and thus this will be interpreted as a negative data point for Monster.

-- Mark S. Marcon, CFA<BREAK /> -- Sean P. Connolly, CPA<BREAK /> -- Jeffrey P. Meuler

The opinions contained in Investors' Soapbox in no way represent those of Barron's Online or Dow Jones & Company, Inc. The opinions expressed are those of the newsletter's writer(s).
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/zigman2/quotes/207661132/composite
US : U.S.: Nasdaq
$ 247.20
+3.21 +1.32%
Volume: 1.17M
Aug. 5, 2022 4:00p
P/E Ratio
35.30
Dividend Yield
1.68%
Market Cap
$103.27 billion
Rev. per Employee
$274,972
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/zigman2/quotes/200058584/composite
US : U.S.: Nasdaq
$ 21.54
+0.04 +0.19%
Volume: 86,904
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P/E Ratio
10.58
Dividend Yield
1.39%
Market Cap
$816.35 million
Rev. per Employee
$675,703
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/zigman2/quotes/201335726/composite
US : U.S.: Nasdaq
$ 31.36
+0.98 +3.23%
Volume: 204,228
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P/E Ratio
8.01
Dividend Yield
1.91%
Market Cap
$618.96 million
Rev. per Employee
$617,093
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/zigman2/quotes/209856151/composite
US : U.S.: NYSE
$ 64.67
-0.08 -0.12%
Volume: 140,758
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P/E Ratio
10.80
Dividend Yield
0.93%
Market Cap
$3.43 billion
Rev. per Employee
$245,241
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/zigman2/quotes/202030365/composite
US : U.S.: Nasdaq
$ 129.55
+0.98 +0.76%
Volume: 979,371
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P/E Ratio
33.78
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2.44%
Market Cap
$46.63 billion
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$288,231
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/zigman2/quotes/209805368/composite
US : U.S.: NYSE
$ 17.28
-0.09 -0.53%
Volume: 5,346
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loading...
/zigman2/quotes/209666445/composite
US : U.S.: NYSE
$ 78.86
-0.15 -0.19%
Volume: 918,905
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P/E Ratio
12.78
Dividend Yield
2.18%
Market Cap
$8.72 billion
Rev. per Employee
$37,370
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/zigman2/quotes/205691535/composite
US : U.S.: Nasdaq
$ 57.95
-0.38 -0.65%
Volume: 139,904
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P/E Ratio
14.01
Dividend Yield
2.07%
Market Cap
$1.24 billion
Rev. per Employee
$121,532
loading...
/zigman2/quotes/205899417/composite
US : U.S.: Nasdaq
$ 91.38
-4.98 -5.17%
Volume: 6.94M
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P/E Ratio
39.93
Dividend Yield
N/A
Market Cap
$48.40 billion
Rev. per Employee
$1.35M
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