British recruiters start to feel jobs chill

Recruiters have warned of a slowdown in the growth of the UK jobs market as employers have started to rethink their needs ahead of a possible recession and further market uncertainty.

Three of Britain’s largest recruitment firms have reported results this week showing record or near record fees. But while there was growth in countries in Asia and Europe, there were signs of a slowdown in other markets including the UK.

Hays said client and candidate activity remained strong but levels had “reduced modestly in a number of other markets as macroeconomic uncertainties increased”, including the UK, Australia and New Zealand and the US. Overall fees rose 15 per cent, however, making it a record third quarter.

James Hilton, finance director at Hays, said demand for jobs had “reduced a little bit”, with the UK suffering “a modest step down in the past few weeks”.

Businesses have been hit by a number of problems in recent months including spiralling costs of energy among other inflationary pressures, and the prospect of stalling economic growth.

Even so, data from the Office for National Statistics this week suggested joblessness was at its lowest level since 1974, with job vacancies matching the number of unemployed.

Hilton said: “There has been a softening from clients in terms of jobs coming to us. We are about 5 per cent below the levels before the summer. But six to nine months ago was an unusually hot market — this has normalised. People still want to change jobs.”

Steve Ingham, chief executive of rival PageGroup, said September was slower in the UK owing to the death of the Queen, and the resulting national days in mourning.

But he warned there were early signs of a slowdown in the record growth of recent quarters. PageGroup reported group gross profit of £270.5mn, a 14 per cent increase over last year.

“One or two clients are struggling and have frozen jobs that they have had with us. Others are taking a little bit longer to make decisions. With all the constant bad news, there has to be a point where people say ‘lets sit tight, and see it out for a few months’. That means one less candidate, one less vacancy.”

Robert Walters reported an 18 per cent increase in net fees across the group but added that fees from the UK alone dropped 6 per cent in the third quarter. Rates of both growth and headcount increases slowed last quarter.

Robert Walters, chief executive, said “the macroeconomic backdrop became more uncertain as the quarter progressed” but “job flow remained largely strong, candidate shortages remained acute, wage inflation continued to grow”.

He added that the fall in UK fees also reflected the “tough year-on-year comparatives” given the unusually strong job market in 2021.