Recruitment firms’ figures suggest Europe is thriving as Brexit talks drag on

“A first quarter-trading statement from Hays highlights the much stronger fee growth in evidence in Europe compared to the UK, completing the picture painted by trading updates from FTSE 250 recruitment agency peers Robert Walters and PageGroup,” says AJ Bell Investment Director Russ Mould.

“Although the companies have slightly different business mixes and present the figures in slightly different ways, the strong momentum on offer in Europe contrasts markedly with the sluggish environment in the UK.

Europe fee growth

Source: Company accounts. Based on calendar year

UK fee growth

Source: Company accounts. Based on calendar year

“On the domestic front, Robert Walters fared best as it pointed to strong activity in the technology and legal sectors in London and strong regional growth.

“PageGroup’s shares took a pasting on Wednesday after the firm unveiled an 8% drop in UK fees as the company cited “Brexit and political uncertainty... particularly amongst our multi-national clients and the more senior permanent candidates.” Meanwhile Hays managed just 1% fee growth (although this did end a run of six straight year-on-year falls) as the private sector (up 4%) showed some modest improvement even as the public sector (down 9%) remained difficult.

“The recruiters’ comments on Europe are much more upbeat. Robert Walters referred to “outstanding growth” on the Continent, with strength from contract, temporary and (most importantly) permanent placements while Hays flagged “broad-based growth”, picking out a 15% increase in German fee income in particular. Page was bullish, too, noting a 21% increase in French income and good showings in Belgium, the Netherlands, Spain and Poland.

“Such evidence shows that both European Central Bank President Mario Draghi and Bank of England Governor Mark Carney have difficult decisions to make when they next prepare to announce monetary policy. Draghi is facing calls to ease back on QE when the ECB next meets on 26 October, as the Eurozone economy continues to surprise on the upside. Meanwhile on 2 November Carney may need to follow through on recent hints that the Bank of England is preparing to raise interest rates for the first time in a decade, even as economic data and corporate commentary alike remain mixed.”

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