Jobs: Recruiter Pagegroup cuts profit guidance, slashes headcount, and bemoans delayed hiring decisions
Recruiter PageGroup became the third recruiter this month to warn on an increasingly shaky jobs market, a worrying sign for the UK economy.
Profit guidance for the year was slashed and the firm confirmed it had let go almost 4 per cent of its ‘fee earner’ workforce.
Full year operating profit is now expected to be “slightly below” previous guidance of £120m – £125m
The company said it made £237m profit in the fourth quarter, down 8.9 per cent on the previous year, with particular weakness in Europe.
Page blamed “tougher market conditions” in the third quarter of last year as “low levels of client and candidate confidence continued to delay time to hire”.
In the UK, gross profit for Q4 declined jut shy of 20 per cent against 2022 to £28.6m.
“This was broadly in line with Q3, and we continued to see clients deferring hiring decisions and candidates becoming increasingly cautious about accepting offers,” the firm said.
This comes after recruiters Hays and Robert Walters issued similarly concerning results last week, with the slowdown in the recruitment sector often acting as a litmus test for the wider jobs market.
This morning, it was also reported that the City’s jobs market had slowed at the quickest rate since 2008, according to Morgan McKinley.
The jobs market has been slowing against the backdrop of sticky inflation and high interest rates, with many companies reluctant to hire without more stable macroeconomic conditions.
Page said against the backdrop of these circumstances, temporary recruitment had spiked by five per cent, against the backdrop of permanent jobs, down 14 per cent, as clients looked for more flexible options.
It pointed towards productivity however, saying that gross profit per earner was up eight per cent on the last quarter of 2022.
With its full results in March, the group warned its operating profit is now expected to be slightly below previous guidance of £120m – £125m.
Its share price has be broadly flat over the last year, gaining around 0.3 per cent.
Praising its “resilient performance in challenging market conditions” Nicholas Kirk, its chief executive said: “Despite the year-on-year decline in gross profit, we are still seeing good activity levels, albeit we did see a deterioration in job flow through Q4.
“However, these activity levels are not all converting into gross profit due to ongoing lower levels of candidate and client confidence.
“Looking ahead, macro-economic uncertainty persists. However, we have a highly diversified and adaptable business model, a strong balance sheet, and our cost base is under continuous review and can be adjusted rapidly to match market conditions.
“Given these fundamental strengths, we believe we will continue to perform well in these challenging markets, and we are confident in our ability to implement our new strategy driving the long-term profitability of the Group.
“We are also seeing the benefits from our investments in innovation and technology, where Customer Connect is supporting productivity and enhancing customer experience, and Page Insights is providing real time data to inform business decisions.”