Jonas Prising : Well, I think it depends on which country you’re in, Mark. But if I step back and you think about what happened during and after the pandemic, we came out of the pandemic in ‘21 with tremendous supply chain shortages and companies ordering anything and all the products and services they could get in a pipeline that they largely started to start consuming and see a return to normal supply chain functioning sometime end of ‘22 and all the way through ‘23, they’ve been working off the inventories that they’ve been getting and as they look ahead, they are constructed on the outlook because they note that the uncertainty exists primarily due to geopolitical events, but the economic news are actually quite encouraging.
Labor markets remain strong. Inflation is coming down. Energy prices have stabilized and their supply chain issues have normalized post pandemic. So from an economic perspective, as you look out, many of the European business leaders we spoke with were quite upbeat in terms of their outlook for 2024. They note that geopolitical uncertainties could impact that, but that’s nothing they control. So within the things they control, they felt constructive about ‘24, but they know we don’t know when it’s going to be improving. We don’t know when interest rates are going to come down, but overall they are probably very much thinking that this is an environment that is tough, challenging headwinds in a number of industries, but they can see the elements of a recovery are there.
And until then they’re waiting, they’re holding, but they are getting ready for the recovery. That’s my sense.
Operator: The next question comes from Kartik Mehta with Northcoast Research.
Kartik Mehta: Thank you. Good morning, Jack, I wanted to go back to a statement you made about bill rate spreads and then holding fairly stable. And so I’m assuming competition hasn’t picked up. And if that’s an accurate statement, are you at all surprised considering what’s going on with revenue trends that competition hasn’t picked up?
Jack McGinnis: Well, I would say on that, Kartik, really if you look at the labor market to Jonas’s earlier comments, the backdrop to all of this is the labor market still relatively tight. It’s been incredibly resilient. And as a result, it’s still relatively hard to get quality workers. So our clients are willing to continue to pay, I’d say stable bill rates and margins have been holding for that reason, even though demand has been down, I think the backdrop of labor market still being relatively tight is a big part of the equation that’s holding staffing margins to where they are. And I would say, it isn’t broad brush. There are, as we said, there are a lot of markets that are actually not seeing the same degree of pressure that we’re seeing in some of North America and some of the European markets.
And that’s been a positive as well, I think, in terms of stronger demand in certain markets. If you take a step back and you look at markets like Italy only down low single digits, right? So it’s really in the markets where you see the bigger declines that I think it is a fair question to ask why aren’t you seeing a little more pressure? But I think if you look at the labor markets in those countries, that’s really the reason why it’s been holding up quite well.
Kartik Mehta: And then I wanted to get your perspective, you or Jonas’s perspective on Right Management, we’re hear at least in the headlines, more layoffs, more companies kind of right-sizing their labor force. And I’m wondering, as you — just the outlook on that business.
Jonas Prising : Kartik, what we have seen is an increased demand for the services of Right Management. But I think we need to put that within the context of what we’re seeing employers doing overall. So while they are — some are trimming their workforces, most employers are still holding on to their workforce. And any reduction in workforce for now has been really mostly felt by our industry and other indicators of labor market flexibility, it doesn’t touch their specific workforce. Clearly, you’ve seen the tech company, the large enterprise tech companies do this early into ‘23 and resize their workforce. And you now have other organizations that are also trimming their workforces for various reasons. But as we look into the first quarter, what we’re estimating is that we’ll continue to seek good demand for Right Management resources, but not an accelerated demand for those offerings.
And that would indicate that the employer attitude is still by and large, hold on to our workforce and wait for the economic conditions to come back, employer confidence to increase as opposed to preparing for larger scale layoffs that would indicate a much stronger growth in Right Management. So that’s how we would think about it.
Operator: The next question comes from Manav Patnaik with Barclay’s.
Manav Patnaik: Thank you. Good morning. Jonas, apologies if this is an overgeneralization, but what environment, I guess, is perfect for you guys. So in the US, I suppose, if there’s a soft landing and job growth is still moderating, perhaps there’s more temp than permanent hiring activity because of that. And then in Europe if things seem to be worse, not along the same lines. So is that just bad that there’s no hiring, temp or permanent, just trying to appreciate what the right mix is?
