Staffing trends follow the economic cycle; that much is obvious.
Even though there have been wobbles recently, Spencer Wreford, finance director at recruitment firm Empresaria (LON:EMR), remains convinced the global economy still has plenty of legs.
“Economies are still in positive GDP growth, it’s just they face more head-winds and are not as booming as they once were,” he said.
The main cause for concern has come from China, and while Wreford admits “the Chinese economy has an effect on South East Asia,” he does not see the recent uncertainty having any lasting impact.
In fact, he said: “In Asia, we think the long term prospects are excellent because of the population sizes and the fact these markets will move from emerging to developing.”
With this as a backdrop, last week, Empresaria, which supplies permanent and temporary staff in 18 countries, saw net fee income rise by 12% over the six months to June as the number of permanent job placements continued to rise.
In the UK, which accounts for more than a third of the company’s business, Wreford reckons things are looking particularly strong.
“The UK [economy’s] forecast was actually increased recently and seems to be very positive still,” he said.
“The UK is one of the strongest [economies] in Western Europe and we expect that to translate into positive staffing markets.”
In the more established markets, such as the UK, improving business confidence has meant a return to job creation, particularly in the permanent job side of Empresaria’s business.
This is due to a talent shortage, which, he says, is a bigger cause of concern than other issues, including a dreaded ‘Brexit’.
Businesses want to hire and due to the talent deficit, are hiring people on long term contracts, rather than on a temporary basis with the option of a long term deal as they might have done previously.
“The biggest threat to the UK is skills shortage and when you are in a talent shortage market, clients need to use recruitment companies to find the best talent,” he said.
Empresaria, which also has exposure in Europe, North and South America, and Asia, saw interim profits jump 35% to £2.7mln or by 44% on a constant currency basis, and expects its strong performance to continue in the second half of the year.
In the US, which he reckons is around six to 12 months ahead of Europe, analysts are very bullish, with economic growth likely to boost the staffing sector.
Latin America is the area where long-term the best growth may come and that is “maybe five to ten years behind where Asia is now.”
Panmure Gordon also sees the firm having strong second half of the year.
The broker raised its estimate for profits for the full year to £7.3mln on the back of the interims.
Adrian Kearsay, an analyst at the broker, said: “Given the on-going progress we can see the share price doubling (perhaps trebling, on a 3 year view).