During a conversation with an investor early in July, I expressed the opinion that Michael Page’s shares would break through the 300p level before the end of the year. At that point, they were trading at 250p and neither of us even considered the possibility that this level would be breached before the end of the month. Yet, after two weeks of roaring equity markets, is was - Michael Page is trading above 300p for the first time since the Adecco bid approach last autumn, Hays is close to 100p for first time since last summer and Sthree is close to an 18-month high. As usual, the less liquid companies (Empresaria, Matchtech and Hydrogen for example) have lagged but should catch up as 2009 progresses.

The FTSE 100 index posted 11 consecutive days of gains in the second half of July, a feat achieved only twice before in its 25-year history, primarily driven by two developments in the US. Firstly, the Q2 earnings season was stronger than expected with particularly robust announcements from the financial services sector, Caterpillar, Apple and IBM. Secondly, economic data has continued to improve.

Within the staffing sector, Manpower and Sthree unveiled results in July. Sthree’s interim results were broadly in line with expectations but June trading was much weaker than anticipated. Although the board noted that “very recently there have been indications that the UK market may be showing some signs of stability”, it remains cautious until further evidence has emerged. This position is particularly understandable given that the decline in net fee income accelerated sharply from -27% in May to -36% in June. Comments made by Manpower in their Q2 results were slightly more upbeat. “While we have continued to see stabilization, and in our major geographies (ie France and North America) slight improvement, we have yet to experience real recovery.” September and October are traditionally strong seasonal months and consequently will provide a more important indication of trading momentum.

At the coal face, operational management (for example, Robert Walters Japan and Hays New Zealand) have been noticeably more upbeat recently than their respective boards. Nevertheless, this is entirely understandable as there is little upside, and potentially considerable reputational downside, to a CEO who risks calling the bottom of the economic cycle.

Kean Marden Partner, Support Services Equity Analyst Singer Capital Markets