In March, job openings in the United States surged to the highest level since the Department of Labor began recording data on this metric. This is a clear indication that companies are keen on hiring workers even as the economy enjoys a nine-year long growth phase after the Great Recession. The report was also in sync with last week’s monthly jobs report, which indicated that employee demand remains resilient.
Also, while growth in average hourly earnings has been largely sluggish, other gauges of wage growth have reported encouraging numbers. And now with a job opportunity available for every unemployed individual, the labor market is at its strongest since the economic recovery began. With labor demand likely to remain high, investing in staffing stocks looks like a strong option at this point.
Job Openings Surge to Series High
According to the Labor Department’s Job Openings and Labor Turnover Survey, or JOLTS, job openings increased from 6.1 million to 6.6 million in March. This is the highest level recorded since the survey was first conducted in December 2000. The largest increase in jobs openings was experienced in professional and business services with vacancies rising by 112,000.
Meanwhile, the construction industry sought out 68,000 more workers while job openings for transportation, utilities and warehousing increased by 37,000. Around 5.4 million individuals were recruited while 5.3 million had to lose employment. The number of people voluntarily giving up their jobs increased to 3.3 million. Also, the percentage of such individuals, also known as the quits rate, increased to 2.5%, in line with a post-recession high.
Labor Market Remains Resilient
The report on job openings was in keeping with other data on jobs released recently. According to date released last week, the unemployment rate declined from 4.1% in March to 3.9% in April, the lowest level in nearly 18 years. This pace was also marginally higher than the Federal Reserve’s targeted rate of 3.8%. This is the first time in six months that the unemployment rate has undergone a decline. (Read: Unemployment Falls to Near 18-Year Low: 6 Winning Picks)
Further, job additions for March were revised upward from 103,000 to 135,000. However, wage growth remained tepid, increasing at a yearly pace of only 2.6%. But other measures of wage growth have delivered better results. The employment cost index increased 0.8% in the first quarter, providing fresh evidence of an uptick in wages. Moreover, the cost of worker compensation advanced to a yearly pace of 2.7%, the largest increase since 2008. This is a logical outcome given unemployment is at a near 18-year low. (Read: 5 Top-Rated Stocks to Defy Fall in Q1 Consumer Spending)
The record increase in job openings indicates that U.S. companies are keen on hiring even though the economy is near full employment. Digging deeper into the report, one sees that the number of individuals quitting positions voluntarily has also increased. Meanwhile, signs of wage growth are increasingly evident.
Adding staffing stocks to your portfolios looks like a prudent alternative at this time. We have narrowed down our search to the following stocks based on a good Zacks Rank and other relevant metrics.
Heidrick & Struggles International, Inc. HSII serves the executive talent and leadership needs of the world's top organizations as the premier provider of leadership consulting, culture shaping and senior-level executive search services.
Heidrick & Struggles has expected earnings growth of 65.8% for the current year. The Zacks Consensus Estimate for the current year has improved by 17.1% over the last 30 days. The stock has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Robert Half International Inc. RHI is one of the world’s largest providers of temporary staffing, project professionals and permanent placement services to the finance and accounting industries.
Robert Half International has a Zacks Rank #2 (Buy). The company has expected earnings growth of 29.6% for the current year. The Zacks Consensus Estimate for the current year has improved by 4.2% over the last 30 days.
Kforce Inc. KFRC is a full-service, web-based specialty staffing firm providing flexible and permanent staffing solutions for organizations and career management for individuals.
Kforce has a Zacks Rank #2. The company has expected earnings growth of 40.1% for the current year. The Zacks Consensus Estimate for the current year has improved by 3.3% over the last 30 days.
Korn/Ferry International KFY is the world's leading and largest executive recruitment firm with the broadest global presence in the executive recruitment industry.
Korn/Ferry has a Zacks Rank #2. The company has expected earnings growth of 16% for the current year. The Zacks Consensus Estimate for the current year has improved by 1.5% over the last 60 days.
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