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3 stocks to buy for an employment recovery

Ignore all the doom and gloom about unemployment! What the mass media is neglecting to tell you is that while unemployment hit a 12-year high of 6.4% last week, Australia has actually created nearly 110,000 new jobs this year!

That’s right, even through poor consumer and business sentiment, a ‘horror’ budget and a high Australian dollar, Australian companies have managed to ADD a huge amount of jobs in the first seven months of 2014.

But 6.4%?

There are two reasons why the unemployment rate went up:

1. The ABS changed its sampling method for this reading, so the reading next month will give a better indication of the trend.

2. The participation rate rose.

Rising Participation Rate

A rising participation rate is important as it demonstrates that unemployed people who were not ‘looking’ for work previously, are now optimistic enough to start looking again. This is actually good for consumer confidence, even if the unemployment rate rises.

3 Stocks to Buy for Employment Growth

Keeping in mind that people looking for a job are more actively thinking about their skills and what an employer is looking for, I believe there are three standout stocks to benefit over the next 12 or so months.

SEEK Limited (ASX: SEK) is well known for running the Seek.com.au jobs website and also generates some profit through its education arm. More job-seekers will mean more website traffic for Seek and more opportunities to sell education services.

Vocation Ltd (ASX: VET) offers companies and individuals vocational education (also called career and technical education). These courses are generally shorter and cheaper than university courses and get workers either earning money, or earning more money, faster. Vocation has three divisions:  Enterprise, Direct and Solutions. As is obvious from their names, the Enterprise side of things provides customised workforce-based training, the Direct business provides training to individual students, and the Solutions business works with other education providers to improve their offerings.

Finally, more people in work, means more savings and thus greater opportunities for discretionary spending. While there are many opportunities in this space I like JB Hi-Fi Limited (ASX: JBH) even though its outlook for the next 12 months is a little underwhelming. There is a chance the company could surprise to the upside like it did this year.

A value price tag + growth + big dividends!

These stocks have favourable tailwinds but don't miss what could be the 'story stock' of 2014! Get The Motley Fool's #1 pick now in our newly updated investment report. It's yours FREE. Simply click here for your copy of "The Motley Fool's Top Stock for 2014."

Motley Fool contributor Andrew Mudie does not own shares in any companies mentioned. You can find Andrew on Twitter @andrewmudie

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