March 1, 2018 / 7:05 AM / a year ago

UPDATE 2-Adecco's slower start to the year undermines shares

* Sees slower growth than rivals Randstad, Manpower in early 2018

* Adecco CEO says economic signs still look positive

* Sees wage inflation of 2-4 pct in Germany and United States

* Shares fall 8 pct (Rewrites throughout, adding CEO comments, shares, analyst)

By John Revill

ZURICH, March 1 (Reuters) - Adecco's revenue growth slowed at the start of the year, sending shares in the world's largest staffing company sharply lower on Thursday despite better than expected earnings.

The Swiss company's shares plunged 8 percent after it said revenue growth slowed to 5 percent in January and February from a 7 percent increase in the last three months of 2017.

Adecco made a slower start to the year than Dutch rival Randstad which said last month its organic revenue grew around 7 percent in January and looked to be around the same in February. U.S. rival Manpower said it expected growth of 6 percent during the first quarter.

Staffing companies results are seen as indicators of the health of the broader economy, with companies taking on temporary staff at the start of a recovery.

Chief Executive Alain Dehaze said he was not worried about his company's slower growth rate, adding that hiring momentum remained broad based across countries and sectors.

"Looking at the start of the year, 5 percent in January and February, it is a slight slowdown, but January is always a mixed month. Some countries are starting late due to local bank holidays. We shouldn’t read too much into January figures," he told Reuters.

"Regarding all the macro signs we have, there is no disruption in the growth pattern."

The company was seeing wage inflation of 2 to 4 percent in Germany and the United States due to a scarcity of workers, but higher wages were not materialising elsewhere, Dehaze said.

Financial companies in London continued to hold off on hiring new staff, due to uncertainties over Britain's exit from the European Union, he added.

Adecco's fourth-quarter net profit rose 38 percent to 297 million euros ($362 million), beating estimates for a net profit of 203 million euros in a Reuters poll..

But the figure was flattered by 100 million euros from a revaluation of deferred tax assets in France and the United States. Operating profit of 274 million euros missed forecasts of 305 million euros.

The company proposed raising its dividend to 2.50 Swiss francs from 2.40 a year earlier and launched a new 150 million euro share buyback.

Adecco's stock has lost 3.3 percent in the last 12 months, underperforming the 6.8 percent gain by the Stoxx Europe 600 Industrial Goods and Services Index.

The slowdown at the start of the year "will raise suspicion that revenue momentum has peaked in this early cycle sector", said Jefferies analyst Kean Marden.

Adecco's results were supported by a 9 percent increase in revenues in France, as the company benefited from labour market reforms of President Emmanuel Macron. Dehaze said the growth level in the country, its biggest market, could be maintained. (Reporting by John Revill Editing by Michael Shields and Keith Weir)

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