US staffing stocks lower after weak jobs report

NEW YORK, April 4 (Reuters) - Shares of U.S. staffing and employment services companies were mostly lower on Friday, after a weaker-than-expected jobs report for March provided fresh evidence a recession is either starting or is already under way.

The U.S. economy lost 80,000 jobs outside the farm sector last month, compared with 60,000 jobs expected, and both January and February job losses were bigger than initially estimated.

The unemployment rate, based on a separate survey, rose to 5.1 percent, the highest since September 2005, the Labor Department said.

The Standard & Poor's HR Employment Services index .GSPEMPL was down 0.3 percent at 88.42. The index had lost about 12 percent of its value since the start of the year.

The chances of a U.S. recession are about 70 percent, said Tig Gilliam, chief executive of Adecco North America (ADEN.VX), who earlier this year put the odds at 50-50.

"In my world, it's already begun," he said. "The issue is that professional job growth has slowed dramatically.

"Through 2007 those professional jobs grew fast enough to outweigh the manufacturing and construction (job losses), now we got a situation where the professional space is not growing."

The government report showed a 35,000 job decline in the professional category last month, following 30,000 jobs lost in each of the prior two months.

Gilliam said he expects continued job losses over the coming few months, and sees the unemployment rate reaching at least 5.5 percent this year.

Still, a few factors are keeping employment from steeper declines. he said.

Coming into the downturn, employers adjusted costs and capacity so they were leaner when the decline started. Also, the retirement of baby boomers means companies can cut payrolls through attrition to some extent, rather than turning to layoffs.

While temporary payrolls are down about 3 percent over a year ago, some companies are turning to temporary workers in some professional and clerical areas, Gilliam said. Without those, temporary job losses would be much steeper.

"We're hearing clients say, this recession may not be as deep as we thought," Gilliam said. "We're seeing more companies seeing the temporary route as a way to manage flexibility."

The percentage of temporary workers in the total work force has been falling since December 2005, said analyst Jeff Silber of BMO Capital Markets.

"As a decline in this metric typically foretells an oncoming recession, this may confirm the worst fears," Silber wrote in a note to clients.

In the past three recessions, job losses lasted for a minimum of 10 months. This time, the labor market downturn may well be shorter, said Scot Melland, CEO of Dice Holdings Inc. (DHX.N), which runs specialized career sites focused on technology and financial services.

"Employers in general have been stingier about adding people, and they can be because of the impact of technology, because individuals are much more productive," Melland said. "The markets themselves have (also) been tighter because of demographic trends."

Manpower Inc (MAN.N) was down 1 percent at $59.12.

Robert Half International Inc (RHI.N) fell 1.1 percent to $25.75. Spherion Corp (SFN.N) lost .0.6 percent to $6.24, all on the New York Stock Exchange.

Swiss-based Adecco (ADEN.VX), the world's biggest staffing company, was 0.6 percent lower in Zurich.

In trade on the Nasdaq, Monster Worldwide Inc MNST.O shares were down 6 cents at $25.53, while Hudson Highland Group Inc (HHGP.O) lost 6 cents to $8.69, and Kelly Services (KELYA.O) was down 4 cents at $20.98 . (Reporting by Nick Zieminski, editing by Dave Zimmerman)