FTSE 350 support services – recruiters: Hopes of a sustained recovery look premature

The strong international growth that has driven the recruiters' recovery post 2009 is now going backwards. Michael Page reported that net fee income (NFI) in Europe, the Middle East and Africa – a region responsible for 41 per cent of business – declined 15.6 per cent in the fourth quarter of 2012, compared with 15.3 per cent growth during 2011's fourth quarter. Hays fared little better, with NFI from Asia Pacific – a region responsible for 29 per cent of business – shrinking 14 per cent in the final quarter of last year. As growth goes backwards punchy ratings come into question.

In the UK, the labour market has surprised many with its resilience, but it is far from healthy. The latest Office for National Statistics numbers show unemployment actually fell by 86,000 to 2.51m between August and October, a long way from the Thatcher-era peak of over 3m unemployed. Mark Beaston, chief economist at the Chartered Institute of Professional Development, said: "The 'jobs enigma', of strong growth in private sector employment in the absence of sustained economic growth, has been one of the most mystifying economic features of 2012."

Mr Beaston puts it down to a number of reasons: "labour hoarding", where employers are reluctant to let highly trained staff go in case there is a recovery; below inflation wage growth; and job seekers moving from permanent to temporary roles. These factors have kept employment artificially high. However, if economic growth returns it is unlikely to help the employment picture as the overcapacity will simply be removed, and if the economy dips again then unemployment could suddenly spike as employers finally take the tough decisions.