Adecco: European jobs market is weakening further
10 August 2012
, by John Revill - Zurich (MarketWatch)http://www.marketwatch.com/story/adecco-european-jobs-market-is-weakening-further-2012-08-10The European job market is weakening further with employers reluctant to hire during the on-going sovereign debt crisis, staffing company Adecco SA said Thursday as it reported a slip in revenue in some of its major markets
"Europe is weakening further," the Swiss company said referring to the jobs market in July, after reporting large falls in revenue from France, Spain and Italy in April to June, while revenue from the previously robust German market swung to a decline.
The staffing sector is generally seen as a barometer for economic health because companies tend to hire temporary staff at the beginning of an economic recovery when most businesses are reluctant to add to permanent headcounts.
"Demand slowed in Germany and also further in Italy," said Chief Executive Patrick De Maeseneire as Adecco reported better-than-expected earnings for its second quarter, helped by gains in North America and the U.K.
Adecco's revenues in Austria and Germany swung from a 10% increase in the first three months of 2012 turned into a 1% decline between April and June.
Adecco said however that demand from the automotive sector in Germany and Austria remained strong, but was weaker in manufacturing.
In July Germany's unemployment rate increased for the fourth month in a row, while the number of vacancies fell as the country began to feel the slowdown in economic activity in Europe and deterioration in economic sentiment.
But Germany's jobless rate of 6.8% is significantly below the euro zone's 11.2% in June, and the 24.8% in Spain, and 14.78% in Ireland.
The situation isn't expected to improve, with unemployment expected to average around 11% this year, up from 10.2% in 2011 according to the latest forecast by the European Commission, the European Union's executive arm.
Looking ahead, Adecco said revenue development in July was slightly weaker, mainly driven by poor markets in France and Japan.
Adecco's Dutch rival Randstad Holding NV last month described the current environment as uncertain.
"We still see a mixed picture in an uncertain environment, illustrated by growth in North America, Asia and Latin America and a gradual slowdown in Europe," said its Chief Executive Ben Noteboom.
"The general labor market in Europe is very weak at the moment, with high youth unemployment in Spain and Italy," Marco Strittmatter, an analyst at Zuercher Kantonalbank, said Thursday.
In two further negative signs for the European job market Adecco's overall revenue from permanent placements declined by 3%.
Companies only tend to hire permanent staff when they are feeling confident about future prospects.
Adecco's income from its out-placement business--which helps unemployed people find new jobs, increased its sales slightly during the quarter.
For the second quarter Adecco reported net profit of €113 million ($139.8 million), down 20% from a year earlier, but beating analyst expectations of €103 million. Revenue was up 1% to €5.19 billion, below expectations of €5.24 billion.