- Little sign of uptick in UK hiring activity according to leading recruiters
- This fits with ongoing softness in official job vacancy figures
- Recruiters continue to trim their own headcount
- Shares in Hays, PageGroup and Robert Walters all back to 2020 (pandemic) levels
“The latest monthly update from the Office for National Statistics shows another drop in the number of UK job vacancies, which now stand 36% below their 2022 peak, and this picture seems to tally with the one provided by the quoted recruitment giants Hays, PageGroup and Robert Walters,” says AJ Bell investment director Russ Mould. “Robert Walters is the last of the three to report and none of them are yet able to demonstrate any major improvement in hiring momentum in the UK and all of them continue to trim their own headcount, to suggest an immediate recovery may not be on the cards, either.
“Gross profit – or net fee income – has fallen year-on-year for six straight quarters at each of Hays, PageGroup and Robert Walters on a worldwide basis, so at least the malaise does not seem to be confined to the UK.
Source: Company accounts. Based on calendar year. Hays' financial year runs to June.
“Indeed, the fact that numbers seem soft in the USA, where the monthly Job Openings and Labor Turnover Survey, or JOLTS, also shows vacancies down by a third from the post-pandemic peak, may suggest that the jobs market is simply returning to ‘normal’ after a highly unusual period where Covid-19 served to distort the economy in so many ways.
Source: ONS, FRED – St. Louis Federal Reserve database.
“Companies seem to be taking few chances. Permanent hiring activity is more subdued than temporary hires and even they are down year-on-year at PageGroup and Hays, who disclose these trends separately. When companies feel confident, they will usually lean more toward permanent hires and when they are less certain they may prefer to offer temporary posts, so weakness even in temporary needs is a potential source of concern for the wider economy.
Source: Company accounts. PageGroup financial year runs to December. Hays’ financial year runs to June.
“This may explain why the recruiters themselves are taking evasive action and managing their own cost bases. PageGroup and Robert Walters disclose their own headcount on a quarterly basis, and both showed another decrease both quarter-on-quarter and year-on-year. Hays flagged a further decline on a year-on-year basis in the number of its fee earners, too.
Source: Company accounts.
“Such softness may be helping to inform monetary policy, where Western central banks have started to cut interest rates as they seek to manage the economy and stave off a hard landing or a recession.
“The number of reductions worldwide in 2024 to date is now 141 according to the website CBRates, a figure only exceeded in the past decade by the virus-hit year of 2020.
Source: CBRates.
“Equally, if the current figures merely reflect a normalisation in employment trends, rather than a major change for the worse, then there remains the risk that central banks ease prematurely and permit economies to overheat.
“As a result, policymakers continue to tread carefully. Stock markets continue to price in the perfect scenario of cooler inflation, a soft economic landing and lower interest rates, but the UK gilt and US Treasury markets appear to be getting edgier about the risk of inflation, judging by how benchmark 10-year yields are higher now than when the Bank of England and the US Federal Reserve launched their initial interest rate cuts.”
Source: LSEG Refinitiv data.
