MW Job hiring has slowed and software-sector unemployment is high, this headhunter says

By Tomi Kilgore

Manpower's stock has its worst day in 27 years as tariff uncertainty, acceleration in use of AI lead to lower demand for permanent jobs

Shares of ManpowerGroup Inc. tumbled to a 13-year low Thursday, after the jobs-placement company suffered a rare earnings miss as uncertainty surrounding tariffs led to lower demand from employers.

To make matter worse, the company said an acceleration in the use of artificial intelligence by employers has led to a relatively high rate of unemployment among software programmers.

And in addition to disappointing first-quarter earnings, the company provided a profit outlook for the current quarter that was well below Wall Street's projections, as a softening in the recruitment of permanent jobs reduced gross margin, or profitability.

Manpower's stock $(MAN)$ took a 19.1% dive on Thursday, to close at the lowest price since Dec. 6, 2012. It also suffered its biggest one-day selloff since its record 27.5% plunge on June 16, 1998.

Chief Executive Jonas Prising said the first quarter was a tale of two halves, as it began with "a sense of optimism" regarding economic growth in the U.S.

"But the last several weeks have impacted the sense of confidence, and the mood is significantly more uncertain and cautious as a result of recent trade-policy announcements in the U.S., with ripple effects far beyond," Prising said, according to an AlphaSense transcript of the post-earnings call with analysts. "At this stage, most of our clients are adopting a wait-and-see approach."

Another reason for reduced hiring has been a structural change in demand, primarily in the technology sector, due to the growth in AI. Prising said companies are now focusing more on skills development for their employees, to prepare them to work alongside AI.

Basically, companies would rather up-skill existing employees than hire new ones. This has particularly affected the market for software jobs.

"So software coding and programming, you can really see how AI has made that much more efficient," Prising said. "And you can see it also come through in the unemployment rate for software programmers here in the U.S., which is above 7% right now, and we're at 4.2% unemployment for the country."

First-quarter adjusted earnings per share, which excludes nonrecurring items, such as tax changes enacted in France, dropped to 44 cents from 94 cents in the same period a year ago. That was below the 52-cent average analyst EPS estimate compiled by FactSet.

That marked Manpower's first bottom-line miss in seven quarters, and just the sixth miss in its past 21 quarters, according to FactSet data.

The company said it expects second-quarter EPS between 65 cents and 75 cents, which compares with the current FactSet EPS consensus of 98 cents.

CEO Prising also addressed concerns that the Trump administration's tougher immigration policy would lead to labor shortages. He said that so far, that hasn't been the case.

"From an immigration perspective, right now, as we all know, immigration really drove a lot of the economic growth that we've seen over a number of years," Prising said. "But as it relates to our business today, we're not seeing any impact that we can directly relate to a tougher immigration policy."

Meanwhile, revenue for the latest quarter fell 7.1% to $4.09 billion, but that was above the FactSet revenue consensus of $3.96 billion.

U.S. revenue increased 1.2% to $688.8 million, while revenue from the rest of the Americas grew 3.3% to $367.9 million.

Revenue from Southern Europe fell 7.4% to $1.83 billion, led by a 12.2% drop in France, while Northern Europe revenue was down 16% to $730.8 million.

Manpower's stock has plunged 30.6% this year, while the S&P 500 index SPX has lost 10.2%.

-Tomi Kilgore

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

April 17, 2025 17:19 ET (21:19 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.