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During late 2008 and early 2009, investors were panicking and were worried that the economy would enter another depression. As a result, this fear created opportunities for savvy investors to pick up shares of excellent companies at bargain prices.

Now, instead of worrying about the next depression, investors are afraid of a double dip recession. The result – fear is back in full force. The bears make us believe that companies will never hire again. Instead of listening to the so-called “experts,” how about paying attention to the companies on the forefront of the labor market – Manpower Inc. (NYSE:MAN) and Kelly Services (NASDAQ:KELYA)? Because both of these companies help employers hire temporary workers, their performance is one of the first indicators of any changes in direction in the labor market.

Reading their quarterly and annual reports and listening to their conference calls can give investors insight and serve as a better resource than the experts on TV. Based on what is said in these reports and conference calls, it seems pretty clear that the employment situation is progressively getting better. By reading the following timeline, you can see that the third quarter of 2009 was the first quarter during which both companies made positive comments about their businesses and the economy. Since then, their reported performance has continued to improve slowly but steadily. It is hard to say whether the next job report will surprise us on the upside but sooner or later it will.

First Quarter of 2008

Carl T. Camden, President and CEO of Kelly Services, Inc. said on the conference call:

As we all know the first quarter has been quite tumultuous. Everyday brought conflicting opinions as to whether the United States is entering a recession in the midst of an extending decline or may be exiting the shallow downturn. This economic uncertainty fueled by shaking credit markets, rising oil prices, stagnant employment, a growing deficit and assorted other problems is taking a toll on nearly every industry including staffing.

The employment picture has failed to show any signs of improvement during the quarter.

Manpower’s 10-Q

In the United States, revenues decreased 2.5% for the first quarter of 2008 compared to the first quarter of 2007, due primarily to a decrease in staffing volume as demand for our services declined. Excluding acquisitions from 2007, revenues decreased 11.1%, an improvement from the decline of 14.2%, excluding acquisitions, in the fourth quarter of 2007.

Second Quarter of 2008

Carl T. Camden, President and CEO of Kelly Services, Inc. said on the conference call:

The second quarter was a rough one. Analyst’s reports and media have well documented the economic challenges faced by our industry and the global economy, but let me highlight the aspects most relevant to Kelly Services. Overall demand for labor in the US, already weak, has worsened since we last reported to you; and demand for temporary staffing is declining at an even faster rate.

June brought the sixth straight month of overall job losses and an unemployment rate of 5.5%. Since January the U.S. economy has lost 438,000 jobs. That compares to a creation of 2.1 million jobs in 2006, and another 1.1 million in 2007. Along with the job loss, temporary employment has posted 15 consecutive months of year-over-year declines with June’s drop being the highest on the cycle.

The current unemployment situation seems to be more of a reflection of employers’ reluctance to add new employees, rather than the result of aggressive layoffs.

Manpower’s 10-Q

In the United States, revenues increased 0.6% for the second quarter of 2008 compared to the second quarter of 2007. Excluding acquisitions, revenues decreased 9.2%, due primarily to a decrease in staffing volume as demand for our services declined.

Third Quarter of 2008

Carl T. Camden, President and CEO of Kelly Services, Inc. said on the conference call:

As our headline numbers show, we have just concluded a very difficult third quarter. The combined wide-spread economic slowdown and anxiety over the worst global financial crisis in decades has led to businesses reducing expectations and as a result companies are slowing their capital spending and most germane to us, scaling back their hiring plans.

Consequently, demand for temporary staffing is declining at an accelerating rate. In the U.S. September saw the ninth straight month of overall job losses, almost 160,000 jobs. In fact, jobless claims are now as high as they were immediately post 9/11. The unemployment rate is 6.1%, the highest in five years. And since January the U.S. economy has lost 760,000 jobs, compared to a creation of 2.1 million jobs in 2006 and 1.1 million in 2007.

The declines in demand for temporary staffing have been even sharper and more prolonged. Temporary employment has posted 18 consecutive months of year-over-year declines with September’s drop being the highest in this cycle.

Outside of the U.S. we are now seeing economic contraction and higher unemployment rates elsewhere in the world, including both Western Europe and Asia.

Manpower’s 10-Q

In the United States, revenues increased 3.5% for the third quarter of 2008 compared to the third quarter of 2007. Excluding acquisitions, revenues decreased 10.1%, or 11.5% when also adjusted for an additional billing day in 2008, due primarily to a decrease in staffing volume as demand for our services declined. This revenue decrease excluding acquisitions reflects a decline from the 9.2% decrease in the second quarter of 2008. During the quarter, we saw declines in our professional business, and continued to experience declines for our light industrial and industrial workers and skilled office workers.

Fourth Quarter of 2008

Carl T. Camden, President and CEO of Kelly Services, Inc. said on the conference call:

As you’re all aware, the fourth quarter was an especially rough one. The widespread economic slowdown and anxiety over the global financial crisis intensified. We saw unprecedented reductions in temporary employment and belatedly received confirmation that we are in fact, in a global recession.

Like virtually all other industries, our has been seriously affected, particularly here in the U.S. where businesses are retrenching, putting expansion plans on hold, and taking actions to optimize their operating results, including reducing personnel expenses.

December saw the 12th straight month of overall job losses in the U.S. What’s more, jobless claims have reached a 26 year high and the unemployment rate stands at 7.2%, its highest rate in 16 years. Since the beginning of 2008, the U.S. economy has lost 2.6 million jobs, with roughly 1.9 million disappearing in the last four months. This compares to 2.1 million jobs created in 2006 and 1.1 million in 2007.

In this environment, it comes as no surprise that demand for temporary staffing is declining at an accelerating rate. In fact, temporary employment has posted 21 consecutive months of year-over-year declines, with December’s drop being the highest in this cycle.

Jeffrey Joerres, Chairman and CEO of Manpower Inc. said on the conference call:

Moving on to our U.S. business, the U.S. business continued to be challenged in this difficult environment. This is the 10th quarter of negative organic revenue growth which creates a strain on the operating and the profits because of the deleveraging.

First Quarter of 2009

Carl T. Camden, President and CEO of Kelly Services, Inc. said on the conference call:

In 2008, the U.S. lost more than 3.1 million jobs, roughly 1.9 million of them disappearing in the last four months of that year. That pace has worsened with more than 2 million jobs already lost during the first quarter of 2009.

March saw the 15th straight month of overall job losses in the U.S., the nation’s unemployment rate reached 8.5%, it’s highest in 25 years.

With that jobs report, it’s no surprise that demand for temporary staffing continues to suffer. In fact, temporary jobs were down 27% compared to the same period last year.

Manpower’s 10-Q

In the United States, Revenues declined 20.7%, or 28.1% excluding acquisitions. These revenue declines are primarily due to a decrease in our staffing volumes, both in our core temporary recruitment business, particularly in the light industrial and the professional sectors. Permanent Recruitment Revenues also declined 40.1% in the Americas with a decline of 40.4% in the United States. These overall revenue declines show a continuing softening of the market from the declines experienced in the fourth quarter of 2008. The United States market has seen the same consistent year-over-year declines in business volumes during the end of the first quarter and the early part of the second quarter.

Second Quarter of 2009

Kelly Services, Inc. 10-Q:

The deterioration of the global labor markets and widespread economic slowdown experience during 2008 and the first quarter of 2009 persisted into the second quarter of 2009. In the U.S. 3.4 million jobs were lost during the first six months of 2009. The staffing industry remained one of the hardest hit sectors with job growth for temporary employees still in decline.

Manpower’s 10-Q

In the United States, Revenues declined 23.9%, or 30.8% excluding acquisitions. These revenue declines are primarily due to a decrease in our staffing volumes, both in our core temporary recruitment business, particularly in the light industrial and the professional sectors, and in our permanent recruitment business, which declined 67.6% in the United States. These overall revenue declines show a continuing softening of the market from the declines experienced in the first quarter of 2009.

Third Quarter of 2009 – FIRST TIME SOMETHING IMPROVED

Carl T. Camden, President and CEO of Kelly Services, Inc. said on the conference call:

While the global economy remains difficult for the staffing industry, the third quarter concluded with more positive underpinnings than when we reported our second quarter results. At that time, we talked about seeing some early signs of stability, and I am pleased to report this moderating trend continued for the third quarter. And while there’s been no big bounce, it’s fair to say conditions and trends over the past few weeks are slowly and modestly improving. I think it’s unambiguous that we are now in the early stages of our economic recovery with staffing market beginning its upturn.

What’s more, employers are adding back hours for their existing employees and bringing back their own furloughed workers before they begin to hire; all of which means that demands for new jobs, including temporary staffing could be moderated for a while. Since December 2007, when the recession began, the U.S. economy lost about 7.2 million jobs or 5.2% of the workforce.

But since mid-year, the rate of job loss has been steadily slowing. The third quarter, particularly in August and September, showed the fewest number of jobs lost this year; and again, the October report showed an even lower rate of job loss.

The temporary staffing industry is also showing modest improvement.

Manpower’s 10-Q

In the United States, Revenues declined 21.2%, or 24.0% excluding acquisitions… These declines show stabilization and some improvement in the market from the declines experienced in the first and second quarter of 2009. The United States market also saw stabilization and year-over=year improvement in business volumes during the third quarter of 2009.

Fourth Quarter of 2009

Carl T. Camden, President and CEO of Kelly Services, Inc. said on the conference call:

Let me start this morning by saying we’re very pleased to report improved results for fourth quarter of 2009. Most notably, we experienced better than expected revenue increases across all of our individual business segments, which I’ll highlight in my segment discussion.

Let me tell you, it’s good to put 2009 behind us. The year began with little optimist. There was high anxiety over the depth and duration of the global economic slowdown and a great deal of uncertainty about the condition of labor markets was felt throughout the year.

The end of the U.S. recession was officially declared in June. For our industry and for Kelly, improvements didn’t really begin to show up until the third quarter with more pronounced progress in the fourth quarter and we ended the year decidedly more optimistic and with greater confidence that the stage has been set for a solid sustainable recovery in 2010.

We are encouraged by the recent trends we’re seeing. In particular, temp volumes are showing meaningful sequential increases, but we know the impact of the past recession will be felt for quite a while and it will take considerable time to recover all of the jobs.

However, we’re very pleased to see that temp employment has risen more than 12% since June with January marking the sixth consecutive monthly increase.

Manpower’s Annual Report

We continued to see stabilization and, in some instances, an improvement in year-over-year revenue trends in the fourth quarter of 2009 in most of our major markets.

First Quarter of 2010

Carl T. Camden, President and CEO of Kelly Services, Inc. said on the conference call:

The global economy and the labor markets are showing very encouraging signs of life. We believe that we are in the early stages of a credible, classic recovery and although the long term pace is uncertain, the progress is head steady and we’re headed in an upward direction.

In the United States, while the unemployment rate increased to 9.9% in April, it actually signals that the employment picture is getting brighter with a greater number of people actively seeking employment. March showed a net gain of 230,000 jobs – the first convincing gain since the recession began at the end of 2007 and this trend continued in April as we saw an expansion of nearly 300,000 jobs.

And across the board, temporary employment has risen by nearly 14% since its lowest point last June with April marking the 10th consecutive month of improvement in year-over-year comparison.

The U.S. economy appears to have reached an inflection point with favorable economic and labor market trends slowly gaining traction. However, there is still plenty of capacity in the marketplace and that will likely remain true in the foreseeable future.

Within Kelly, we’re seeing another trends that are characteristic of the early stage of a classic recovery. In April, we observed the 11th consecutive month of increased demand for light industrial staffing and although clerical, professional, and technical and another staffing sectors lagged last year’s levels, they are showing improvement from their low points.

Jeff Joerres, Chairman and CEO of Manpower Inc. said on the conference call:

It has been a long time since I have been able to say in a conference call that by far away the U.S. is leading our revenue growth, far greater than any of our major geographies.

Manpower’s 10-Q

In the United States, Revenues from Services improved 18.3%. These revenue improvements were primarily due to an increase in our staffing volumes in our core temporary staffing business, particularly in the light industrial and office sectors.

Source: Jobs, Jobs, Jobs: Temp Agency Reports Signal Positive Labor Market Changes