No sign jobs picture getting worse: execs

NEW YORK (Reuters) - Friday's weaker-than-expected January jobs report confirms recent signs that the U.S. economy is slowing, but it does not suggest the U.S. jobs picture will get much worse, staffing industry executives said on Friday.

The U.S. economy lost 17,000 jobs outside the farm sector last month, compared with expectations of 80,000 jobs being added. It was the first monthly job loss since August 2003.

The unemployment rate eased to 4.9 percent from 5.0 percent a month ago, the Department of Labor said.

"There's no doubt the economy has slowed," said Tig Gilliam, who heads North American operations for Swiss-based Adecco SA, the world's biggest staffing company.

But the slowdown in job growth in recent months can largely be attributed to construction and manufacturing, two sectors that have been hurt by a weak housing market and overseas competition.

The unemployment rate in those categories is twice the national average, Gilliam said. "You have sectors of the economy that are clearly struggling, so of course the total job growth has got to slow."

Gilliam puts the chance of a U.S. recession this year at 50-50, as weak areas are balanced out by strength in areas like finance, accounting, legal and information technology.

"We're going to see strength in the professional skills over the first half," Gilliam said. "If we don't get growth in the professional skills area, I'll change my forecast for the recessionary outlook."

A weak dollar may help U.S. exports, which could improve the jobs picture in the manufacturing sector, he added.

Staffing company shares, which slumped at the start of the year, have recovered most of those losses. The Standard & Poor's HR Employment Services index was trading up 1.5 percent at 96.91 on Friday, reaching its highest level since Jan 2.

Several companies have reported better-than-expected earnings in recent weeks, including Robert Half International Inc, Kelly Services Inc, and Manpower Inc, which posted fourth-quarter results Friday, an hour before the government jobs data.

"The U.S. is still seeing a challenged and potentially difficult environment," Manpower CEO Jeff Joerres said on a conference call Friday. "It's an environment that has not necessarily gotten weaker ... but at the same time, we can't say that there's any kind of U-shaped curve here because it's not getting any stronger."

Kelly Services CEO Carl Camden said he sees an 80 percent chance of a pick-up in hiring by the second half of 2008.

"Nothing is screaming that the economy is getting worse, but also nothing is saying the economy is getting better," Camden said in an interview.

The unemployment rate among college-educated workers is still about half the overall national rate, he said. It's a trend reflected in the company's own fourth-quarter results, which showed weaker sales in commercial staffing but strength in its professional segment.

"We're growing jobs in the part of the economy that's counting on intellectual property, on an educated workforce," Camden said. "That's where we've put discretionary investment."

Kelly shares were up 2.6 percent in midday trading Friday at $17.67. Also on the Nasdaq, Monster Worldwide Inc jumped 6 percent, one day after the parent of Internet jobs site reported better than-expected quarterly results.

Manpower stock rose 2.3 percent to $57.56 on the New York Stock Exchange, and has now erased all of its 2008 losses.

(Reporting by Nick Zieminski; Editing by Derek Caney)