Jobless claims rose last week,while workers filing for unemployment benefits jumped to 6.1 million nationally. Seasonally-adjusted numbers in unemployment benefits generated from initial claims came in at 640,000 for the week ending April 18, according to the Labor Department. The U.S. economy is still reducing employee numbers.

Initial claims can be an indicator of the overall economy with lower numbers signaling an end to the recession. These 640,000 new claims come in about 4.5% higher than the 613,000 reported one week earlier. (Take a look at the biggest economic declines in the U.S. since the Great Depression, read A Review Of Past Recessions.)

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Internet Job Search
Job search agencies should be busier than ever, as seekers flood companies with resumes and take advantage of the search functions. Unfortunately for some firms, this is not how they make money. Many job search companies, such as owned by Monster Worldwide, Inc. (NYSE:MWW), charge companies to post a job but do not charge searchers. It does provide paid services for job seekers, but relies heavily on job posters for income. So, if there are less companies looking to fill positions, there is less money coming in. It even goes beyond that - more job searchers means more resources are being spent on providing the free services. Jobs are being quickly scooped up, reducing the time and money companies are spending for renewals. Monster reports on April 30, with analysts expecting earnings per share (EPS) of -10 cents.

Robert Half International (NYSE:RHI) also provides staffing services, but will struggle as long as there are lower paying customers. EPS came in at six cents on April 22, down substantially from 45 cents per share reported one year ago. Harold M. Messmer, Jr., chairman and CEO of Robert Half International said: "We also believe the company is in a good position to grow market share as some of our competitors contract their operations." This is like saying, "we think we will survive as our industry struggles."

Staffing services and solutions provider Kforce, Inc. (Nasdaq:KFRC) will report on May 5 with a current earnings estimate of seven cents per share. On March 31, 2009 the firm decided announce a repurchase plan, ending on May 7, 2009. A focus on government staffing from its subsidiary Kforce Government Solutions (KGS) could be a positive move, as the infrastructure projects we heard about start to need staffing. But the effects of this might not be felt this quarter.

Who can Benefit from High Jobless Claims?
Visa (NYSE:V) beyond the obvious need for funds after losing your job, Visa is the main provider of the debit cards for unemployment benefits. JPMorgan Chase (NYSE:JPM) has contracts for supplying these prepaid unemployment cards in seven states and is in talks for two more according to the U.S. Department of labor. Also Citigroup (NYSE:C) issues debit cards through Visa as well.

Upon approval, debit cards are mailed to the claimant and act as the payment source for the funds, unless you elect payment through direct deposit. The 640,000 new claimants could potentially create huge profits for companies such as JPMorgan Chase and Citigroup, due to all of the small fees associated with debit cards.

Until new jobless claims start dropping, there will not be a huge recovery in the stock market. A dropping unemployment rate will indicate rising demand for products and therefore demand for employees. With unemployment at these levels, an economic recovery will take a couple more quarters. (For more read Economic Indicators: Jobless Claims Report.)

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Tickers in this Article: MWW, RHI, V, C, JPM, KFRC

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