Jobless claims declined 26,000 for the week ending Jul 18 to 255,000. This is the lowest level experienced since 1973. During the prior period, jobless claims declined by 15,000 to a seasonally adjusted 281,000. Initial claims have remained below the key level of 300,000 since late February, its longest streak in 15 years. These are clear signals that the labor market may be strengthening in the near term.

Sustained Drop in Claims

However, there is some seasonal volatility. Auto plants generally shut down during this time of the year since they retool operations for new models. During the week ending Jul 4, jobless claims jumped 15,000 to 297,000 due to auto plants closing down in states including Michigan and Ohio. Further, school staff varies as the period coincides with summer holidays. Hence, it will be a prudent idea to keep an eye on long-term trends.

The four-week moving average evens out sharp fluctuations in weekly reports. Even in this case the underlying trend looks positive. The 4-week moving average edged down to 278,500 from previous week’s unrevised average of 282,500. The average level of jobless claims has hovered near this mark since early April, indicating employers are retaining their staffs despite the odds.

Payroll Additions to Rise

An upbeat jobless claims report bolstered the view that nonfarm payroll additions for the month of July may exceed June’s figure of 223,000. Analysts believe that employers will add around 250,000 jobs in July. Overall, the U.S. economy has been able to add an average 208,000 jobs a month in 2015.

This positive report on labor market also comes in at a time when the unemployment rate has hit a 7-year low. Unemployment rate came in at 5.3% in June. The number of long-term unemployed also decreased by 381,000 to 2.1 million in June. Further, the U-6 rate dropped to 10.5% in June, its lowest level since Jul 2008.

Hiring had already gained traction in both manufacturing and service sectors last month. Private sector hiring increased at the fastest pace in six months in June. According to the Automatic Data Processing, Inc. (ADP - Analyst Report), 237,000 private jobs were added last month, higher than market expectations of 220,000 jobs. The robust pace of growth indicated the US labor market “remains in high gear,” according to the report.

Meanwhile, the Employment Index, a gauge of employment levels and hiring intentions increased 3.8 percentage points to 55.5% in June, its highest level since Dec 2014. Hiring was also broad based with 10 out of 18 manufacturing industries reporting employment growth, while only 3 posting a decline in employment.

Broader Picture Encouraging

Upbeat jobless claims report comes in at a time when the movement for hiking minimum wage is gaining ground nationally. Cities such as Seattle, San Francisco and Los Angeles have moved to raise minimum wages to $15 an hour, up from the federal minimum wage rate of $7.25 an hour. Also, the GDP is positioned to accelerate to 2.9% this year, its fastest growth in a decade.

Initial claims numbers have consistently declined since the economy started to recover since 2009. This low level of layoffs generally results in increasing payrolls, eventually boosting staffing companies. Further, the US temporary staffing industry is poised to grow at 6% to $115 billion in 2015 and another 5% to an all-time high of $121 billion in 2016.

4 Staffing Picks

Banking on these encouraging trends, we present four staffing stocks that have a good Zacks Rank and are expected to grow in the near term.

Randstad Holding NV (RANJY - Snapshot Report) operates as a global provider of HR services including North America. It provides services such as temporary staffing, permanent placement and recruitment of middle and senior managers.

RANJY holds a Zacks Rank #2 (Buy) and has expected earnings growth of 22.1% for the current year. In the past two months, the Zacks Consensus Estimate for the current year was revised 4.1% higher.

ManpowerGroup Inc. (MAN - Analyst Report) provides a variety of staffing and workforce management services, including temporary staffing services.

MAN holds a Zacks Rank #2 (Buy) and has expected earnings growth of 3.6% for the next quarter. Over the past two months, the Zacks Consensus Estimate for the current year was revised 2.5% higher.

Korn/Ferry International (KFY - Snapshot Report) is the world’s largest executive recruitment firm with global presence in the executive recruitment industry.

KFY holds a Zacks Rank #2 (Buy) and has expected earnings growth of 6.7% for the current year. In the past two months, the Zacks Consensus Estimate for the current year was revised 0.9% higher.

On Assignment Inc. (ASGN - Snapshot Report) is a provider of temporary scientific professionals to laboratories in biotechnology, food and beverage, chemical and environmental industries.

ASGN holds a Zacks Rank #1 (Strong Buy) and has expected earnings growth of 17.9% for the current year. In the past two months, the Zacks Consensus Estimate for the current year was revised 6.3% higher.