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Improving Economy Improves Outlook for Staffing Industry Stocks

December 11, 2013 3:27 pm
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There's been a nice, recent, one-two combination of positive news for the American economy — in that gross domestic product rose as unemployment fell.

Following up those developments was a report from the Department of Commerce, that American exports were at a record level in October.

Those are all bullish developments for the $100 billion staffing and outsourcing industry in the United States and publicly-traded companies such as Korn/Ferry International (NYSE: KFY), Team Health Holdings (NYSE: TMH), Kelly Services (NASDAQ: KELYA), TrueBlue (NYSE: TBI), and Labor SMART (OTC: LTNC).

A previous article on Benzinga reviewed how the staffing and outservicing sector is prospering from the evolution of the American economy.

The fall in unemployment, along with the increase in gross domestic product, is positive for the stocks in the industry. American businesses looking to hire more are now favoring temporary workers. The Affordable Care Act, or ObamaCare, requires firms with more than 50 employees provide expensive health insurance to those working more than 30 hours a week.

As a result, companies are utilizing the goods and services of the staffing industry. That is particularly true for those in the $29 billion demand labor group, such as TrueBlue and Labor SMART. TrueBlue is up more than 50 percent for 2013. Labor SMART just posted record revenues again. Revenue growth is strong for TrueBlue, too, as its earnings per share are up more than 30 percent on a quarterly basis.

Related: As the American Economy Evolves, More Companies are Hiring Part-Time Work

The rest of the sector has benefitted from changes in the U.S. economy. For 2013, Korn/Ferry International is up more than 50 percent. Team Health Holdings has jumped more than 60 percent for the same period. And since the first of the year, Kelly Services has risen nearly 50 percent.
The improving economic outlook for the United States should lead to a bullish future. Companies will hire more, but emphasize temporary workers to keep down costs. Businesses adapted to that model during the Great Recession, and will adhere to it as the economy improves — as it is more efficient and more effective in producing profits. 

That should lead to continuing gains for Kelly Services, TrueBlue, Team Health, Labor SMART, Korn/Ferry International and others in the staffing and outsourcing services industry.

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