The two biggest names in the recruitment business, Hays (HAS) and Michael Page (MPI), revealed falling net fee income in trading updates this week, as overseas markets slow down and companies take on more temporary staff and fewer permanent placements.
Michael Page warned that full-year profits would miss market expectations, and chief executive Steve Ingham said: "The third quarter did, indeed, prove to be challenging across all our regions." Third-quarter net fee income of £126.5m was down 8.3 per cent on the second quarter.
The Europe, Middle East and Africa region reported the sharpest fall, with net fee income of £49m, down 15 per cent on the second quarter, while the UK continues to struggle with net fee income 5.2 lower at £29.5m. Net fee income from placing people in permanent jobs was down 10.4 per cent on the previous quarter to £97.9m, while temporary billings were more resilient - down only 0.1 per cent to £28.6m.
Mr Ingham added: "In most regions, activity levels improved towards the end of the third quarter. However, we do anticipate another challenging, fourth, quarter, with economic conditions and market confidence likely to remain poor for the foreseeable future."
Broker Panmure Gordon cut its adjusted pre-tax profit forecast for the current year from £69.1m to £66.7m, giving a reduced EPS of 14.5p.
The tough trading outlook was echoed a day later by Hays, which reported net fee income for the quarter ending September, down 4 per cent on the same period last year. The worst-performing regions were Asia Pacific and the UK and Ireland, down 8 per cent and 9 per cent, respectively. Growth of 5 per cent in continental Europe and rest of the world was driven by 25 per cent like-for-like growth in Germany. Broker Panmure Gordon kept forecasts unchanged and expects full-year adjusted pre-tax profits of £122.1m, giving EPS of 5.7p.
