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Analysis: Amid jobs gains, worries persist over Europe

Smith fills out an online job application with the help of career consultant Coleman at the Workforce Alliance Career Center in West Palm Be
Smith fills out an online job application with the help of career consultant Coleman at the Workforce Alliance Career Center in West Palm Be

By Nick Zieminski

NEW YORK (Reuters) - Friday's stronger-than-expected December U.S. jobs growth figures drew a sharp contrast with European numbers, but staffing executives who track labor demand on both sides of the Atlantic caution Europe's impact on jobs in the United States may yet prove deeper than it has so far.

Executives in the temporary staffing and employment services field say anxiety about a likely recession in Europe keeps cropping up in conversations with clients and, in some cases, is putting hiring plans on hold.

Faced with falling sales and profits in Europe, multinational clients may look for offsetting savings in other markets, including the United States.

Randstad Holding NV , the world's second-largest temporary staffing provider by revenue, offers one anecdote to illustrate how Europe weighs on U.S. jobs.

Randstad's recruitment outsourcing business, SourceRight Solutions, which handles large-scale hiring of as many as 500 people at a time, has a banking client that tentatively plans aggressive expansion in 2012. But the client's plans are being held hostage by Europe.

"There's still caution around Europe and how they could impact the U.S.," said Joanie Ruge, Randstad senior vice president and chief employment analyst. "That is (clients') biggest concern right now, though they seem optimistic about all the economic indicators in the U.S. moving in the right direction."

Uncertainty persists even as the U.S. economy improves by many measures. U.S. manufacturing grew at its fastest pace in six months in December - in sharp contrast to the euro zone. Pending home sales are the highest since April 2010 and U.S. consumer confidence is at an eight-month high.

Friday's employment report improved that picture. The U.S. economy added 200,000 non-farm jobs last month, 50,000 more than expected, and the jobless rate slipped to 8.5 percent, the lowest since February 2009.

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Non-farm payrolls graphic: http://link.reuters.com/qyn85s

Jobless rate graphic: http://link.reuters.com/vyn85s

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FEWER FINANCE JOBS

Recruitment in financial services has slowed and is likely to be "lighter" this year, said Scot Melland, Chief Executive of Dice Holdings Inc , which runs specialized jobs websites focused on professional categories.

"We've seen job postings for the industry as a whole decline over the last six months," Melland said. "It's really caused by the uncertainty that the industry is facing (from) the European debt crisis and some regulatory uncertainty here in the United States."

By contrast, technology workers remain in demand and energy markets are looking at record job growth in 2012, according to Dice.

Friday's report showed an unexpected decline in temporary help payrolls, which are historically a strong predictor of wider labor trends. But staffing industry insiders said the dip does not square with their own business and could be an anomaly that reflects seasonal factors.

Demand for temps has been steady if unspectacular, said Joel Capperella, vice president of marketing for Yoh, a Philadelphia-area staffing company that focuses on professional categories such as finance and technology and whose clients include SAP AG .

"We're hopeful the pace will pick up a little bit," Capperella said, adding that Europe was so far not affecting specific workforce decisions, but was a factor in overall client confidence.

"Capital is still held close to the vest, but we do see it flowing a little bit more freely," he said.

CURTAILED SPENDING

Tig Gilliam, who heads North American operations for Adecco SA , the world's leading staffing company, said Adecco is expecting "significant pressure" in Western Europe, which may already be in recession. Even strong markets, such as Germany, are expected to slow, although developing markets in Eastern Europe are likely to grow this year.

Gilliam sees a risk in underestimating the effect of Europe's slowdown on the U.S. economy. Large employers, instead of investing to accelerate growth, may curtail spending to boost profits in markets that are holding up relatively well, he said.

"If you go to a U.S. multinational company and they look at what they're facing in Western Europe in the next year, it automatically translates into that much more pressure on the markets that are performing," he said. "They've got to find how much more they can save because they have a hole in Europe to dig out of from a profitability perspective."

Staffing company shares were mixed on Friday. Among the largest U.S.-listed shares, ManpowerGroup and Robert Half International Inc , were both modestly lower in midday trading, while Kelly Services Inc rose.

In European trading, Adecco, Randstad and London-listed Michael Page International Plc were up slightly.

(Reporting By Nick Zieminski in New York; editing by Andre Grenon)

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