The latest recruitment earnings season may have been wholly underwhelming, but recent data published by Morgan McKinley and Vacancysoft suggests the nadir might have finally passed for City hirings.
Morgan McKinley noted that finance recruitment took a backseat during the 2024 general election, with vacancies in the banking sector down 3% in the first half of the year, per monthly averages.
New hirings have been muted for the second year running, with the BDO Employment Index continuing to plump decade lows amid poor business optimism.
This hiring freeze was clearly underscored in FTSE 250-listed recruitment firm PageGroup PLC (LSE:PAGE)’s latest interim report, which showed profit before tax collapsing by more than 56% on a year-on-year basis.
Things were scarcely better for FTSE 250 contemporary Hays PLC (LSE:HAS), which saw profitability “significantly impacted” by “increasingly challenging market conditions”.
However, the landslide election win for Keir Starmer’s Labour party in July has contributed to a sense of “cautious optimism” for City hirings, said Morgan McKinley’s associate director of projects and change, Mark Astbury.
“The accountancy and consulting sectors may continue to rebound as businesses seek guidance on adapting to new fiscal policies,” said Astbury.
He continued: “Key factors influencing the banking industry’s trajectory include potential regulatory changes.
“With a new Labour government in place, shifts in policies affecting taxation and corporate governance could increase demand for tax advisory services.
“Additionally, the US election could play a pivotal role; changes in US policies and international relations might impact global financial markets and, consequently, the UK finance sector.”
But whether these short-term catalysts will support City hiring in the longer term is another story.
Chancellor Rachel Reeves has yet to formally outline Labour’s fiscal policy, though she has strongly hinted that her debut October budget will be high on taxes and low on spending.
This is being billed as a set of tough measures to plug what Reeves says is a £22 billion black hole in Britain’s budget.
For now, City recruitment firms continued to feel the heat of hiring headwinds, with Pagegroup and Hays shares down 16% and 14% year to date, respectively.