Shares in the UK’s biggest listed recruiters took a hit today following a warning from Robert Walters PLC (LSE:RWA) of softening demand for staff and an industry survey which showed vacancy growth at its lowest since February 2021.
The survey from industry body the Recruitment and Industry Confederation in partnership with KPMG showed economic uncertainty, pressure on clients' budgets and low candidate numbers all dampened hiring activity at the end of 2022.
Permanent placements fell for the third month in a row, and at the quickest rate since the start of 2021, while billings for temp staff rose only modestly.
Overall, the REC/KPMG permanent hiring index stumbled to 44.5 in December from 46.4 in November with a reading below 50 pointing to a fall in demand for staff showing signs that the so far resilient UK jobs market might be creaking.
Full time hiring is falling
Lagging indicator will concern rate setters
As AJ Bell’s investment director Russ Mould noted “There will be fewer pieces of economic data that get central bankers and investors on a state of higher alert than slowing jobs markets.”
“This is particularly the case as employment data is a lagging indicator” he pointed out, adding “as such jobs data released now may reflect boardroom thinking from three to six months ago.”
The REC/KPMG survey showed that vacancies rising at the slowest rate since February 2021 although this helped ease the shortage in candidates while rates of pay growth were the weakest for 20 months.
All four monitored English regions noted lower permanent staff appointments at the end of 2022 with the sharpest falls in the south of England while the softest decreases were seen in London.
Construction sees biggest drop in vacancies
By sector seven of the 10 employment categories saw a rise in demand for permanent staff in December with the steepest rises in nursing/medical/care, followed by hotel & catering. But construction saw the biggest drop in vacancies, not a great surprise, given the recent data on the housing market.
Temporary staff vacancies increased across all ten sectors at the end of 2022 with retail, hotel & catering and nursing/medical/care seeing the steepest rises in demand.
Executive/professional saw the slowest upturn, and one that was marginal overall.
Commenting on the latest survey results, Neil Carberry, chief executive of the REC, said: “A slowdown in permanent placements is not unusual in December, but this one comes as part of a wider softening trend in the permanent market.”
He felt the big test of the labour market “will come this month.”
Walters warns sending peers lower
The survey came on the same day that international recruiter, Robert Walters PLC, warned that full-year profits, although at record levels, would be slightly below current market expectations.
Updating investors on fourth-quarter trading, the international recruitment group said: “The global macro-economic backdrop became increasingly uncertain as the quarter progressed resulting in a softening of recruitment activity levels across many of the group's markets.”
In a fourth quarter trading update it reported strong growth in Europe (18%) and the UK (8%) but this was offset by a slower rise in Asia Pacific of 3% with net fee income in China down 24%.
The news sent shares in Robert Walters down 5% while fellow UK listed recruiters, Hays PLC (LSE:HAS) and PageGroup PLC (LSE:PAGE) fell 5.5% and 6.5% respectively.
European peers, Adecco and Randstad were also under pressure, down 5.3% and 6.6%.