Jonas Prising: Well, it’s already different, Stephanie, in terms of we’ve not seen the cooldown that we would normally associate with our industry being on the leading edge and then subsequently followed by the cool down in the broader labor markets. But we’d expect that to happen, but at this point, depending on who you ask, we don’t think that cooling is going to be that significant, but significant enough to create some slack and really to start the growth cycle from moving forward again as far as our industry is concerned. The areas of course that could kickstart this evolution is a lowering of interest rates, very important. Cooling of geopolitical tensions, equally important. This could be another trigger in a number of other events.
Right now, frankly, we feel that the Europe is following a more traditional cycle, the economy is cooling. It’s likely that the ECB will lower interest rates, maybe even before the Fed lowers interest rates, and that will be a good signal that now comes the time to start to gear up and generate more economic growth in Europe, and we would then hope to see improving PMIs in Europe. And since we have such a big part of our business in Europe, we would see that as a very good sign. So we don’t know when we should see and expect either of those to happen either in Europe or in the US, but we expect that — that is how it would happen. But the trigger point for when it turns around, I think is really going to come very closely related to, you know, lowering of interest rates and inflation levels dropping.
Right now our inflation rates are higher and they’re moving in the wrong direction and that needs to cool off further before everything can get going the way we would expect it to do.
Stephanie Moore: Got it. Thank you so much.
Jonas Prising: Thank you.
Operator: Thank you. Our next question comes from George Tong with Goldman Sachs. Your line is open.
George Tong: Hi, thanks. Good morning. You mentioned trends in France and Italy were beginning to stabilize, which is an improvement from past quarters. You touched on the auto sector, but can you elaborate a little bit more on what you’re seeing in the labor markets in these countries and what’s helping to drive that stabilization?
Jonas Prising: Yeah, the labor markets in both Italy and in France have cooled somewhat. The Italian economy is actually doing very well overall, and a lot of that comes from EU funds that are being channeled and deployed across Italy as part of the Recovery Act in Europe. And France has seen a cooling of the labor market, a cooling of economic growth. But I think since, we are an industry that is concurrent with economic trends that we’ve seen, you know, the step-downs that have occurred over a number of quarters, as we look at the economy and the labor markets overall that the trends within our industry should lead to a stabilization with continued headwinds. So let’s remember that these are still markets that are well below where they were pre-pandemic, but that we are starting to see that stabilization as we have seen in the UK, in the US, now also in the Netherlands, in other parts of Europe as well.
So it’s really been a progression of countries where our business has reached a point and then appears to be moving sideways sequentially after that point. And we expect that to happen in France and Italy as well.
George Tong: Got it. That’s helpful. And then I wanted to dive further into your productivity initiatives and cost cutting efforts. Can you talk a little bit more about where you are in your journey to achieve improved productivity and right size headcount?
Jonas Prising: I think as you’ve seen, George, of course during an environment like this, we’re deleveraging, so productivity is moving down. We are adjusting to Jack’s point, our SG&A and our headcount, being very careful and balanced in our approach because we want to mitigate the near-term effects of the headwinds that we’re seeing in particular in Europe and in North America, but at the same time retain enough resources to make sure that when the rebound happens that we’re extremely well positioned to take advantage of that. And it’s that — and at that point that we’re going to see the productivity improvements on our business flow through to the bottom-line. And you can see some improvement of course occurring in terms of our bottom-line between the first quarter and the second quarter.
As Jack mentioned, our first quarter is a weak quarter due to the start of the year and the resetting of taxes in a number of countries. We move into the second quarter, it improves. But the real improvement, of course, is going to come when our volumes and associates and consultants for Experis starts to move up and we can leverage the investments we’ve made in technology, as well as regaining the productivity we lost during the cyclical downturn.
George Tong: Very helpful. Thank you.
Jonas Prising: Thanks, George.
Operator: Thank you. And our last question comes from Heather Balsky with Bank of America. Your line is open.
Emily Marzo: Hi, this is Emily Marzo on for Heather Balsky. I’m wondering if you could give any additional color into the pricing environment. I believe you called out the staffing had solid pricing. You’ve seen, but I’m wondering if you could give any additional color there.
