Demand for white-collar workers in the private sector slowed in the past three months while hiring in the public sector continued to plummet, Britain’s largest professional staffing group said today.
Hays said that net fees from placements in the private sector in the UK rose by 7 per cent in the fourth quarter, down from 18 per cent in the previous three months as banks cut back on recruitment.
This is at odds with CBI claims that hiring in the financial services sector has been increasing and that the City would add another 10,000 jobs in the next few months.
The slowdown in private sector placements will add to worries about the pace of Britain’s economic recovery at a time when hiring by the public sector continues to decline sharply. Fees from public sector placements fell by another 34 per cent in the last three months, Hays said.
Hays, which specialises in placing professional staff such as IT technicians, accountants and engineers, is regarded as a bellwether for the state of the British economy, although the UK now accounts for only 12 per cent of its business.
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Growth in other key markets, such as Asia and Europe, also slowed during the fourth quarter, despite new investments in offices in Brazil, Ireland, Japan and Poland. Overall, net fees were up 11 per cent in the period on a like-for-like basis compared to the previous year.
Alistair Cox, Hays’ chief executive, said: “This quarter we have continued to deliver good and broad-based net fee growth, driven by our International operations which grew net fees by 23 per cent. Around the world, 18 countries increased net fees by more than 20 per cent in the quarter.
“In the UK, momentum in the private sector recovery has slowed and therefore we have further reduced the cost base to improve the profitability of this business going forward.”
In Asia, the firm had record growth in China and Singapore, although its Japanese operation was disrupted by the earthquake and tsunami, with net fees falling 2 per cent during the period.
Germany was another strong territory, with net fees jumping 28 per cent in the fourth quarter.
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Fees in the UK fell 6 per cent overall, Hays said. The UK private sector business was hampered by a slowdown in hiring by banking and City clients, although demand for workers in construction, IT and marketing was buoyant.
Public sector fees continued to decline and have now fallen by 57 per cent from their peak as a result of the Government’s spending cuts, Hays said.
In the six months to January, Hays posted net fees of £326.1 million, up 20 per cent on a like-for-like basis, while operating profit was up 38 per cent to £52.1 million.
Its Asia-Pacific business generated net fees of £100.5 million, up 38 per cent on a like-for-like basis, and the rest of the world contributed £102.5 million, up 33 per cent.
In the UK and Ireland, in contrast, fees grew by only 1 per cent to £123.1 million, while operating profits slumped 66 per cent to £2.1 million.
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Andy Smith, an analyst at Charles Stanley Securities, said: “We believe investors will focus on the poor outlook in the UK, which is only expected to account for 12 per cent of operating profits. Any weakness in the share price should be seen as a buying opportunity — we expect operating profits to increase from £80 million to £104 million.”
Its shares slipped by 3p to 100.1p in early trading.