No Recovery on Manpower's Radar

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Temporary staffing firm Manpower (MAN Quote) painted a grim picture of the U.S. economy Thursday, saying signs of recovery have yet to arrive.

The Milwaukee-based recruiter reported second-quarter earnings that beat estimates thanks to its overseas operations. But the company said domestic labor markets continue to be weak, and warned that third-quarter earnings would come in significantly below analysts' expectations.

"In the U.S., we have yet to experience an increase in activity to indicate that we are in the midst of a meaningful upward economic turn," said Jeff Joerres, chief executive of Manpower, in a statement. Joerres said the economic environment in most of Manpower's markets is difficult.

No Gambling

For the third quarter, Manpower expects earnings of 42 cents to 46 cents a share, vs. current estimates for 54 cents. "Our forecast is appropriate given the uncertainty of our current market," said Joerres on a conference call. "We could see an inflection point in demand in the third quarter. But we do not believe it is appropriate to factor that into our estimates. Companies remain reluctant to bring on new employees."

Temporary employment is an early and important indicator of labor market activity. When companies see a pickup in demand for new workers, they usually will add temps before hiring permanently.

Economists remain cautious in their employment outlooks. "We think the labor market is going to remain soft through the end of the year," said Joseph Abate of Lehman Brothers. He expects the unemployment rate to peak at 6.6% this year. In June, the jobless rate ticked up to 6.4% -- a nine-year high -- and the economy shed another 30,000 nonfarm jobs.