Investor’s Business Daily (03/28/13) Vance Cariaga

Shares of many staffing firms have risen to multiyear highs in recent weeks as an upswing in the U.S. labor market spurs the demand for temporary and permanent employees. “The [turnaround] may be reflecting a pickup in demand for staffing, either because business is better or there is increasing optimism,” analysts at Vermilion Technical Research note in a report on the sector. Some staffing firms, such as ManpowerGroup and Kelly Services, are likely to see earnings growth this year after seeing profits fall last year. Others are likely to improve on the earnings increases they saw last year. “The staffing companies, after spending most of the last three years consolidating sideways and underperforming, have bullishly inflected in a very positive, broad-based way,” Vermilion notes.

“One reason [temporary] staffing jobs have grown faster than other jobs since the trough of the recession is that they were hit harder,” says Randy Reece, an analyst at Avondale Partners. “Even now, [temporary staffing firm] employment is still 10% below the previous peak. The tantalizing upside potential is that [temporary jobs] have rebounded this much in a very mediocre labor market.”