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Potential investors will find the industrial service industry, which includes temporary employment agencies and janitorial services, above average in earnings potential. The majority of equities listed experienced steady stock price increases since Dec 1995 due to employment increases, the trend towards corporate outsourcing, and other factors. Personnel placement and uniform services are among the most timely segments of the industry.

Steady earnings are expected for the industrial services industry in 1996, due mainly to solid US economic growth. Demand for industrial services to save money through outsourcing will also increase. Supplier reduction, consolidation, and competitive advantages of size are the major industry trends for 1996. These stocks are timely investments and are expected to outperform the market for the next six to 12 months.

Stock prices in the employment service sector of this industry have risen due to a 40% earnings gain in the Jun 1995 qtr. Overseas operations of US corporations, diverse income sources, and outsourcing of human resource functions allows this group to have good results. Revenues and earnings for the essential services group continue to be solid as well. These stocks will outperform the market through the 1990s.

Stocks in the employment service sector fell, due to the loss of US jobs in April and May of 1995. However, these stocks may not underperform the market as a consequence of diverse revenue sources, overseas profits, and outsourcing by US firms. This sector should have moderate growth in the latter half of 1995. Investors seeking long-term gains will find stocks of value in the employment subgroup of industrial services.

Employment agencies have not been hurt by the Feb 1995 5.4% unemployment rate or the shortage of temporary employees, and will be helped by 1995's economic slowing. Companies that provide needed services, such as pest and termite control, do well in 1995 in spite of economic cycles. Particular issues in this industry have good earnings potential for the rest of the 1990's and should be evaluated on an individual basis.

The industrial services industry will perform well during 1995, as it did during 1994, as the economy recovers and employers hire temporary workers during uncertain times. As the economy gains more strength and temporary workers become more difficult to find, firms will begin hiring more full-time help. Companies such as Kelly Services will do well because a large amount of its placement services deals with permanent placement.

The industrial service firms that are benefiting most from the economic upswing are seven that offer personnel placement services, especially Manpower and Kelly, which do business in Europe. Outsourcing is proving to be a boon for these companies. Essential service firms are also doing well, particularly ServiceMaster LP and Rollins Inc. The diverse nature of this industry gives it a mixed investment outlook.

Companies that provide essential services have survived the economic downturn of the early 1990s better than others. Personnel placement services, in particular, have benefitted from a cautious economic climate where employers are more apt to hire temporary workers than take on the costs of permanent employees. Investors should consider investments in this industry carefully and stick with higher-rated stocks.

The diversified industrial services industry offers many strong choices to potential investors. Temporary agencies have benefitted from the business trend to replace permanent with temporary employees. Companies offering services that cannot be postponed are also profiting. These include the pest control service companies, ServiceMaster LP and Rollins Inc, and the uniform cleaning service companies, UniFirst and Cintas Corp.

Temporary service company stocks may suffer with general US economic recovery, but other sectors of the industrial services industry should not be greatly affected by economic fluctuations. Strong investment possibilities include the pest control companies, Rollins Inc and ServiceMaster LP; the uniform manufacturers UniFirst Corp and Cintas Corp; and the automation services company, Equifax.