PageGroup warns of hit to profits amid hiring slowdown

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PageGroup has warned of a hit to profits as “risk averse” businesses hold back on hiring, marking the latest recruiter to sound the alarm over a slowdown.

The UK-based company said on Monday that gross profit for the fourth quarter was 8.9 per cent lower year on year at £237mn, with particular weakness in the UK, where profits fell by almost a fifth.

PageGroup said it had seen a “deterioration in job flow” in the period, with cautious employers and job hunters putting off making decisions because of a difficult economic climate.

“Trading conditions in Asia, the UK or the US saw no improvement, while trading conditions deteriorated in Europe,” the company added.

The warning comes after similar updates from peers Hays and Robert Walters last week, with Hays also downgrading its profit forecast due to a “clear slowdown” in global jobs markets.

PageGroup said it was now expecting annual operating profits to be “slightly below” previous guidance of £120mn-£125mn. Shares fell by 3 per cent in early trading on Monday.

Clients’ “recruitment budgets have tightened”, according to PageGroup, making them “more risk averse which has slowed the recruitment process”. It added that although “salary levels remain strong”, offers were “not as elevated as they were in 2022”.

Cautiousness among employers has also boosted demand for temporary roles over permanent positions, with clients seeking “more flexible options”.

Gross profits from temporary hiring increased by 5.2 per cent over the fourth quarter, compared with a 13.9 per cent drop for gross profits from permanent appointments.

PageGroup has been cutting staff in response to falling demand, shedding 224 staff, equivalent to 3.7 per cent of its fee-earning roles, over its fourth quarter, and 57 back-office staff. The company had a total headcount of 8,572 in June last year, which has since fallen below 8,000.

PageGroup chief executive Nicholas Kirk said: “Despite the year-on-year decline in gross profit, we are still seeing good activity levels . . . However, these activity levels are not all converting into gross profit due to ongoing lower levels of candidate and client confidence.”