Adecco Group (OTC:AHEXF), a Zurich based human resources company, yesterday posted dismal Q2 results, no matter which line of the income statement you'd prefer to look at. Top line was down 31% from the prior year's quarter - a relatively disappointing hit to revenue; that is, until you drop down to EBITA for the quarter, which declined 90% from Q2 '08. Breaking the results out geographically, revenue for the US and Canada came in only slightly better at -29%.
How is this relevant to the employment situation? Adecco Group's euphemism of a business description - human resource services - is known colloquially as a temp agency.
Adecco isn't just any temp agency though; it's a Fortune 500 global company that operates in 60 countries, and supplies roughly 500,000 workers to 100,000 clients each day.
Furthermore, the company provides more than just the stereotypical temp who shuffles paper and is gone after a week; much to the contrary, Adecco matches workers up with clients who require a wide-range of skill sets, including those in the Finance, Legal, Medical, Scientific and Information Technology industries. They are (to borrow a line from the Dos Equis commercials) "the most representative employment agency...in the world."
The post-Lehman economic shock caused many businesses to slash payrolls at a merciless rate in order to contend with a shrinking top line. As the economy bottoms out and businesses gain confidence, they are expected to look disproportionally towards temporary and contract workers - you know, the kind that don't require severance packages.
That being said, Adecco Group is likely to be one of the first corporations to feel the effect of a turnaround in the labor market. Perhaps they should even be viewed as a leading indicator of employment trends in North America and Western Europe.
Regardless, the company's precipitous drop in revenue - and dearth of guidance to suggest that Q3 results will show improvement - does not bode well for the near term labor market outlook.
Disclosure: no position in Adecco