UK austerity may boost jobs: Manpower CEO

By Nick Zieminski

NEW YORK (BestGrowthStock) – Austerity measures introduced by the UK government on Wednesday may boost jobs growth even as they reduce civil service employment, the chief executive of global staffing company Manpower Inc said on Wednesday.

Britain’s economic growth may moderate as a result of the measures, but their benefits will quickly become apparent, Manpower CEO Jeff Joerres said.

“You’re creating jobs in a different way by being able to create certainty for companies that they’re not going to continue to be taxed to pay for public programs,” Joerres said in an interview.

British Finance Minister George Osborne detailed the harshest spending cuts in decades on Wednesday. Business leaders have supported the coalition government’s harsh austerity drive, arguing that big spending cuts were needed to stop borrowing costs from rising.

Manpower generates about 11 percent of its Europe, Middle East and Africa (EMEA) revenue from Britain, and the segment increased third-quarter sales by 11 percent, or 17 percent in constant currency terms. About a third of the business is in the public sector, including local and county governments.

“It will make a difference but we think we’ll make it up in other areas,” Joerres said.

France, not part of Manpower’s EMEA segment, is the company’s single biggest market.

Joerres spoke after Manpower reported a quarterly profit that beat Wall Street expectations by a wide margin, as employers stepped up their reliance on temporary workers in the face of an uncertain economy. Its shares jumped 3.7 percent and lifted shares of other employment services companies.

Joerres said the temporary staffing industry was in an unusually long period of strengthening demand, with growth in almost every geographic market. Companies are not willing to hire in anticipation of a recovery, he added, but are looking for flexibility.

“We’ve never had a spot like this as an industry. When we do, it’s short-lived, three to five months, and then you’re into a full-on recovery,” he said.

Manpower’s U.S. sales jumped 35 percent in the quarter, excluding acquisitions. The company is able to meet demand because it did not cut capacity as aggressively as rivals, who are reopening offices shuttered during the recession. It may open new offices to add capacity in the United States, Joerres said, but would not reopen offices closed previously.

Barclays analysts said Manpower’s earnings would likely surpass its 2008 peak in 2013, which could mean a 65 percent jump in its share price between now and then. Joerres said there were too many variables to confidently make long-term predictions.

“Models are interesting,” he said. “We are better positioned than in the last (recovery), and there are stronger secular trends, and that’s as far as we can go from a predictions perspective.”

Manpower is one of many U.S. multinationals to cite the strength of emerging markets this earnings season, since economies like China suffered shorter and shallower downturns. As a result, U.S. businesses are increasingly leaning on demand from such markets, which some economists have called “a one-legged stool.”

That is not a cause for worry, even if China’s growth slows a little, said Joerres, whose company does business in 82 countries and territories.

“That one-legged stool is one hell of a big leg,” he said. “Most of what’s going on there, what we hear from our clients, it’s not for export; it’s for the domestic market. That domestic market has a long runway.”

Emerging markets will make a substantial contribution to Manpower’s earnings within three to five years, he added.

(Editing by Richard Chang)

UK austerity may boost jobs: Manpower CEO