London-listed recruitment firms Robert Walters PLC (LSE:RWA) and Hays PLC (LSE:HAS) both delivered underwhelming trading updates on Tuesday, serving as a double reminder of the stagnation in the UK employment market.
Small-cap Robert Walters saw group profits decline 16% year on year in the first quarter, with Asia Pacific, Europe, UK and Rest of World segments all falling between 14% and 16%.
The middling results were already telegraphed prior to the first-quarter update, with chief executive Toby Fowlston stating that “the general environment remains one where client and candidate confidence is at low levels, which we expect to continue to be a headwind to fee income growth in the near-term”.
Mid-cap player Hays, which focuses on temporary employment, saw net fees fall by 14% in the third quarter, with Australia and New Zealand posting a particularly poor result.
Chief executive Dirk Hahn said: "Market conditions remained challenging through the quarter… and fees were also impacted by lower-than-normal average hours worked per assignment”.
Hahn expects market conditions to remain challenging “but broadly stable” going forward.
These results follow similarly disappointing first-quarter earnings posted by FTSE 250-listed PageGroup PLC (LSE:PAGE) yesterday and higher-than-expected unemployment figures today.
Speaking on the state of the employment market, Danni Hewson, AJ Bell’s head of financial analysis, said: “There have been big questions asked about how much we can rely on ONS jobs figures, and they are always backwards looking.
“But when you consider the latest trading updates from recruiters PageGroup and Robert Walters you can see a clear picture developing.
“Recession might be short-lived, but employers have had their confidence shaken and with the cost of borrowing so high many will have put off expansion plans until they can see past the current volatility.”
Robert Walters’ share price fell 4.6% while FTSE 250-listed Hays shares fell 3.8% following the publication of their trading updates.