U.S. staffing firm shares fall on weak jobs report

* Sector down 3 pct, slightly deeper slide than S&P 500

* Execs see no quick turnaround for U.S. recession

By Scott Malone

BOSTON, July 2 (Reuters) - Shares of staffing companies fell on Thursday after a government report showed U.S. employers cut more jobs than expected last month and the unemployment rate rose to 9.5 percent.

Staffing executives said the sharper-than-expected drop suggested there will be no quick end to the current recession

-- the worst the United States has seen since the early 1980s. -- the worst the United States has seen since the early 1980s. Job cutting will likely continue through 2009, likely pushing unemployment above 10 percent, they said.

"It's going to take till the end of the year at best before we stop losing jobs," said Tig Gilliam, North American chief executive for Adecco SA (ADEN.VX), the world's largest staffing company. "The unemployment rate is going to rise; north of 10 percent is likely. It's just not going to turn around on a dime."

The Standard & Poor's commercial and professional services index .15GSPCS was down 2.7 percent in midday trading, a somewhat steeper slide than the 2.3 percent of the broad Standard & Poor's 500 index .SPX.

U.S. employers cut 467,000 jobs in June, far more than the 363,000 consensus of Wall Street economists polled by Reuters. The slump broke a four-month trend of moderation in job losses. [nN02549309]

While the results were worse than economists had forecast, some staffing executives said they had not been surprised by the severity of the drop.

"It's very consistent with what our customers have been telling us," said Scot Melland, CEO of Dice Holdings Inc (DHX.N), which runs specialized Web sites for recruiting in the information technology, engineering and finance sectors. "The majority of hiring companies are still reducing their hiring plans and a significant number of them are considering layoffs."

NO SIGNS OF RECOVERY

While the worst of the recession may have passed, employers will need demand for goods and services to pick up dramatically before they begin hiring in significant numbers, Melland said.

"A lot of our customers feel better about the economy, they feel better about their business than they did three and six months ago, but that has not yet translated into hiring," Melland said.

The biggest decliners in the sector included Monster Worldwide (MWW.N), which fell 9.1 percent to $10.92, and Spherion Corp (SFN.N), down 6.5 percent at $3.88. Both trade on the New York Stock Exchange.