1. Equity Research
Employment Sector
Signs That Labor Market Improvement Might Be Accelerating a Business Services: Global
Services │Staffing
Bit
April 01, 2011
Overview:
The Department of Labor announced this morning that the U.S. labor market
added 216,000 jobs in March, which was better than the consensus projections
for a gain of about 195,000 jobs. The unemployment rate also ticked down
slightly. These results are consistent with a number of other data points that
suggest a continued improvement in the labor market, including perhaps a slight
acceleration in that pace of that improvement during the last two months.
The underlying trends within the labor market also appear favorable for the
staffing and consulting companies that we cover. Contrary to some concerns
that temporary staffing employment would tick down sequentially during March
and was leveling off because of a preference by corporations for full-time
workers at this point in the cycle, temporary staffing employment continued to
improve during March, with the year-over-year growth rate remaining relatively
strong at 12.5% despite tougher year-ago comparisons. We also note that
employment in several parts of the business services sector is increasingly
strong. Employment in the consulting field is improving, employment in the
accounting field jumped in March by the biggest amount since 2003,
employment growth in the IT sector appears to remain quite strong, and
employment in clerical and administrative positions continues to grow quickly.
We view this as a positive sign for staffing firms focused on professional and
clerical fields, as well as for consulting firms.
We remain bullish on many of our employment-related stocks, but we have
become slightly more selective in picking stocks within the group (6-12 months
ago we recommended nearly every employment-related stock that we cover, but
we now recommend about 60% of them). Revenue multiples are below the
levels the group enjoyed in the mid-2000s and revenue growth rates are
improving, so we believe the overall group will perform well during the next few
years. At this point in the cycle, though, we are focusing our recommendations
on those companies that can drive strong peak-to-peak earnings through
secular growth in the industry, market share gains, an increase in their
addressable market, or structurally improved profit margins. Our Outperform-
rated small-cap stocks in this group right now are CTPartners (CTP $14.15),
Korn/Ferry (KFY $22.27), and Dice Holdings (DHX $15.11), while our
Outperform rates midcap names are Robert Half (RHI $30.60), Manpower (MAN
$62.88), and Paychex (PAYX $31.39).
Timothy McHugh, CFA Christopher York
312.364.8229 312.364.8341
tmchugh@williamblair.com cyork@williamblair.com
Please consult the last page of this report for all disclosures.

2. William Blair & Company, L.L.C.
Highlights From the Department of Labor Report:
The Department of Labor announced this morning that the U.S. labor market added 216,000 jobs in
March. This result exceeded the consensus estimate by 21,000. The report also included small
positive revisions for the last two months. Government employment continued to decline for the fifth
consecutive month. If we exclude government workers and temporary staffing in the month of March,
the United States reported an increase of about 201,000 jobs. This represents the second consecutive
month of 200,000 job additions, which is roughly double the average monthly gain during the
preceding seven to eight months.
Monthly Change in Private Sector Nonfarm Payroll, Excluding Temporary Staffing
400
(in thousands)
201
200
0
(200)
(400)
(600)
(800)
(1,000)
Jan‐08 Apr‐08 Jul‐08 Oct‐08 Jan‐09 Apr‐09 Jul‐09 Oct‐09 Jan‐10 Apr‐10 Jul‐10 Oct‐10 Jan‐11
Another positive data point in this report was a continued gradual decrease in the unemployment rate,
which has now decreased for four consecutive months. The unemployment rate slightly decreased 10
basis points to 8.8% during March, which was lower than the consensus estimate for an unchanged
rate of 8.9%. The unemployment rate is now at its lowest point since March 2009. The Fed is
projecting the unemployment to range from 7.5% to 8% at the end of 2012.
Historical Unemployment Rate
12%
10%
8%
6%
4%
2%
0%
Sep‐00
Sep‐01
Sep‐02
Sep‐03
Sep‐04
Sep‐05
Sep‐06
Sep‐07
Sep‐08
Sep‐09
Sep‐10
Jan‐00
Jan‐01
Jan‐02
Jan‐03
Jan‐04
Jan‐05
Jan‐06
Jan‐07
Jan‐08
Jan‐09
Jan‐10
Jan‐11
May‐00
May‐01
May‐02
May‐03
May‐04
May‐05
May‐06
May‐07
May‐08
May‐09
May‐10
Timothy McHugh, CFA 312.364.8229 2

3. William Blair & Company, L.L.C.
Turning to industry-specific employment, the report showed job growth across professional and
business services, healthcare, leisure and hospitality, mining, and manufacturing sectors. As shown
below, job growth in professional and technical services, which is a proxy in demand for many of the
professional services companies that we cover, was relatively strong (up 35,000).
Department of Labor Report
Employment in Professional and Technical Services
(i.e., Accounting, IT, Legal, Engineering, Consulting)
7,700
7,650
7,600
7,550
7,500
7,450
7,400
7,350
7,300
7,250
Dec‐09
Dec‐10
Jun‐09
Jun‐10
Oct‐09
Oct‐10
Nov‐09
Nov‐10
Apr‐09
Jul‐09
Apr‐10
Jul‐10
Feb‐09
Sep‐09
Feb‐10
Sep‐10
Feb‐11
Mar‐09
Mar‐10
Mar‐11
Jan‐09
Jan‐10
Jan‐11
Aug‐09
Aug‐10
May‐09
May‐10
As shown in the chart below, job growth within the business and professional services sector
continues to be strongest in the administrative support and IT sectors, which is consistent with
commentary we hear from many staffing companies. However, we also note that there was a relatively
strong recovery in accounting employment during the month of March. Accounting employment
increased 1% year-over-year to 898,000 jobs, which represents the first year-over-year growth since
August 2008. On a sequential basis relative to February, employment in the accounting field increased
20,200, which is the largest sequential improvement since February 2003. Employment in the
management consulting industry also continued to improve in March. Lastly, employment in the legal
sector remains muted.
Business and Professional Services
12% Year‐over‐year Change in Employment
10%
8%
6%
4%
2%
0%
‐2%
‐4%
‐6%
Legal Accounting Architecture and Computer Systems Management Administrative &
Engineering Design Consulting Support
Oct‐10 Nov‐10 Dec‐10 Jan‐11 Feb‐11 Mar‐11
Timothy McHugh, CFA 312.364.8229 3

4. William Blair & Company, L.L.C.
Employment in the temp staffing industry continued to recover during the month of March. There had
been some short-term concerns that temporary staffing employment would decline on a sequential
basis, based on a slowing trend within the American Staffing Association’s weekly staffing index.
Growth within the sector remained strong, however. Based on the seasonally adjusted data, year-
over-year growth in temporary-staffing employment was 12.5%, relatively unchanged from growth of
12.8% and 12.9% during the previous two quarters. The non–seasonally adjusted data actually grew
slightly faster on both a sequential and year-over-year basis. As shown in the chart below, the year-
over-year growth rate for the sector has been decelerating because of difficult year-ago comparisons,
but has leveled off somewhat during the last few months at a still healthy growth rate—the peak
growth rate for the sector last cycle was about 8%. Temporary staffing now accounts for 1.73% of the
total labor market (penetration rate), up from 1.55% during the year-ago period. Employment in the
temp staffing sector has now replaced more than half of the 931,000 jobs that it lost from its peak and
is about 15% below its prior peak employment level.
Year-over-year Change in U.S. Temporary Help Employment
30%
20%
10%
0%
-10%
-20%
-30%
Aug-00 Aug-01 Aug-02 Aug-03 Aug-04 Aug-05 Aug-06 Aug-07 Aug-08 Aug-09 Aug-10
Other Recent Labor Market Data. The bullet points below highlight other labor market data that was
released during the last week.
 Initial Unemployment Insurance Claims. Initial unemployment claims were flat during the
month of March compared with the month of February, yet March claims trended down
throughout the month. Initial unemployment insurance claims for the week ended March 26,
2011, were 388,000. This was the lowest number of initial unemployment insurance claims
during the month of March. The four-week moving average of initial unemployment insurance
claims is now at 394,000, which is below its 10-year moving average of 397,000. This
compares with a four-week moving average of 428,000 at the beginning of December,
413,500 at the beginning of January, 418,250 at the beginning of February, and 396,000 at
the beginning of March. The 400,000 level is a closely watched level that many people have
historically associated with the difference between an improving and weakening labor market,
so a sustained movement below that level is an encouraging sign.
Timothy McHugh, CFA 312.364.8229 4

5. William Blair & Company, L.L.C.
Four-week Moving Average of Weekly Initial Unemployment Claims
(claims in thousands)
700
650
600
550
500
450
400
350
300
250
200
Source: U.S. Department of Labor
 Challenger, Gray, & Christmas Job Cut Report. The Challenger, Gray, & Christmas job cut
report showed total planned job cuts of 41,528 in March, down 39% year-over-year.
Employers announced a total of 130,749 job cuts in first quarter 2011, which is 28% lower
than the 181,183 planned layoffs announced in the prior-year quarter. As reflected in the chart
below, the total number of job cuts has moderated over the last year, remaining close to an
average level of 42,000 planned cuts a month. Consistent with previous months’ results, the
government/nonprofit sector was the most active in terms of announced job cuts in March.
During the month of March, planned job cuts in the public /nonprofit sector represented 46% of
layoffs.
Challenger, Gray, & Christmas Job Cuts Report
Announced Planned Job Cuts
300,000
250,000 241,749
200,000
150,000
100,000
41,528
50,000
0
Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11
Source: Challenger, Gray, & Christmas Job Cuts Report
 American Staffing Association Index. As reflected in the chart on the following page, the
American Staffing Association Index (ASA) has trended up slowly during the first quarter. In the
most recent week (ending March 20), the ASA index was 91, flat with the previous week,
representing an 8% year-over-year increase from the prior-year week. The average year-over-
year increase for the ASA thus far in March is slightly more than 8%, versus 12% in February,
13% in January, and 24% in December. We attribute most the of deceleration in the year-over-
year growth rate in this index to tougher comparisons for industrial staffing firms, which account for
the bulk of the index. We believe that the growth rate for most professional staffing firms is still
Timothy McHugh, CFA 312.364.8229 5

6. William Blair & Company, L.L.C.
accelerating or has leveled off at high levels. Overall, we believe that the weekly ASA trends
suggest that the demand environment remains solid for temporary staffing services.
ASA Temp Staffing Index
Absolute Value of Index
105
100
95
90
85
80
75
70
65
60
10/6/2008
11/6/2008
12/6/2008
10/6/2009
11/6/2009
12/6/2009
10/6/2010
11/6/2010
12/6/2010
1/6/2008
2/6/2008
3/6/2008
4/6/2008
5/6/2008
6/6/2008
7/6/2008
8/6/2008
9/6/2008
1/6/2009
2/6/2009
3/6/2009
4/6/2009
5/6/2009
6/6/2009
7/6/2009
8/6/2009
9/6/2009
1/6/2010
2/6/2010
3/6/2010
4/6/2010
5/6/2010
6/6/2010
7/6/2010
8/6/2010
9/6/2010
1/6/2011
2/6/2011
3/6/2011
 ADP Employment Report. The March 2011 ADP employment report reflected total private sector
job gains of 201,000, which was slightly below the consensus estimate for job gains of 205,000.
This marks the 14th consecutive month of job gains. Overall, ADP’s data shows a meaningful
improvement in job growth over the last four months. Job gains over the last four months have
averaged 211,000 during the previous four months, versus an average addition of about 65,000
during the prior nine months.
Staffing Industry Update
Total Private Sector Job Losses as Measured by ADP
(in thousands)
300 246
190 208 201
200 113 122
50 63 79
100 49 42 31 32
4
0
-100 -50
-99
-200 -140 -124
-186
-300 -235
-400 -357
-500 -439 -433
Source: ADP
Looking at employment by sector, March’s job growth was once again predominately in the
service-providing sector. During the month of March, private-sector employment in the service-
producing sector increased by 164,000. Meanwhile, private-sector employment in the goods-
providing sector continued its trend of a slow recovery as it increased for the fifth consecutive
month during March (up 37,000).
Timothy McHugh, CFA 312.364.8229 6

7. William Blair & Company, L.L.C.
ADP Employment Report
Monthly Private Employment Trends By Sector
250
200
164
150
100
50 37 37
0
-50
Service Goods Manufacturing
Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11
 Monster Employment Index. During the month of March, the Monster Employment Index (MEI)
increased 9% year-over-year. This growth rate has moderated somewhat during the last six to
nine months, but the growth rate bounced back up in March despite a tough comparison. Some of
the slowdown during the last few months is attributable to reductions in public administration
employment, which declined 13% during March, and weaker hiring in the real estate sector.
Turning to industry-specific trends within the MEI, mining, quarrying, oil, and gas extraction lead
the way with 68% growth from a year ago, followed by utilities with 35% growth.
Year-over-Year Change in the U.S. Monster Employment Index
30%
20%
10%
0%
-10%
-20%
-30%
-40%
Aug-06 Dec-06 Apr-07 Aug-07 Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10
 Conference Board Online Help Wanted Index. Painting a somewhat different picture than the
Monster Employment Index, the Conference Board’s Online Help Wanted Index showed a year-
over-year growth rate of about 19% for the month of March. The index now stands at the highest
level since May 2007. New ads, which are unduplicated ads not appearing during the previous
month, were up 22% year-over-year and 4% sequentially. The year-over-year trend had been
Timothy McHugh, CFA 312.364.8229 7

8. William Blair & Company, L.L.C.
moderating since peak levels in mid-2010 because of a tougher year-ago comparison, but has
bounced back up modestly during the last month or two.
Conference Board Help Wanted Online Index
40% Year‐over‐year Change in Number of Job Ads
30%
20%
10%
0%
‐10%
‐20%
‐30%
‐40% Dec‐09
Dec‐10
Jun‐09
Jun‐10
Oct‐09
Oct‐10
Nov‐09
Nov‐10
Apr‐09
Jul‐09
Apr‐10
Jul‐10
Feb‐09
Sep‐09
Feb‐10
Sep‐10
Feb‐11
Mar‐09
Mar‐10
Mar‐11
Jan‐09
Jan‐10
Jan‐11
Aug‐09
Aug‐10
May‐09
May‐10
Total Number of Ads Number of New Ads
 Institute of Supply Management (ISM) Employment Index. As shown in the chart below, trends
in the ISM manufacturing index remained elevated during the month of March (the ISM
nonmanufacturing index will be released on Tuesday, April 5). The ISM manufacturing
employment index cooled a bit during the month of March to 63 from February’s 64.5 reading.
While the index slowed a bit from February, the index still remains very high, as March’s reading
represents just the fourth month in the past decade that this part of the index has been above 60.
On a year-over-year basis, the index grew 14%. As a reminder, a reading above 50 implies that
the manufacturing or nonmanufacturing economy is expanding.
ISM Employment Index
70
60
50
40
30
20
10
0
Apr-08
Oct-08
Apr-09
Oct-09
Apr-10
Oct-10
Aug-08
Sep-08
Nov-08
Dec-08
Aug-09
Sep-09
Nov-09
Dec-09
Aug-10
Sep-10
Nov-10
Dec-10
Jan-08
Jun-08
Jan-09
Jun-09
Jan-10
Jun-10
Jan-11
Jul-08
Jul-09
Jul-10
May-08
May-09
May-10
March
Feb-08
Mar-08
Feb-09
Mar-09
Feb-10
Mar-10
Feb-11
Manufacturing Non-Manufacturing
Timothy McHugh, CFA 312.364.8229 8

9. William Blair & Company, L.L.C.
Additional information is available upon request.
Current Rating Distribution (as of 03/31/11)
Coverage Universe Percent Inv. Banking Relationships* Percent
Outperform (Buy) 58 Outperform (Buy) 9
Market Perform (Hold) 31 Market Perform (Hold) 2
Underperform (Sell) 1 Underperform (Sell) 0
*Percentage of companies in each rating category that are investment banking clients, defined as companies for
which William Blair has received compensation for investment banking services within the past 12 months.
Timothy McHugh attests that 1) all of the views expressed in this research report accurately reflect his/her personal
views about any and all of the securities and companies covered by this report, and 2) no part of his/her compensation
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