(This article was originally published at 1604 GMT
Thursday.)
By John Revill
ZURICH--The European job market is weakening further with
employers reluctant to hire during the on-going sovereign debt
crisis, staffing company Adecco SA (ADEN.VX) 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 (RAND.AE) 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
euros ($139.8 million), down 20% from a year earlier, but beating
analyst expectations of EUR103 million. Revenue was up 1% to
EUR5.19 billion, below expectations of EUR5.24 billion.
-Write to John Revill at john.revill@dowjones.com
