Recruiter Hays signals UK upturn

City of LondonRecruitment firm Hays has said its embattled UK division had returned to sales growth but that conditions remained "fragile" amid an ongoing clampdown on hiring in the City.

The group said that while third quarter net fees in the UK and Ireland were flat year-on-year, it had seen "modest" growth on the previous three months thanks to strong demand for temporary roles.

Hays saw good fee growth across Yorkshire, the Home Counties, Scotland and the Midlands.

The 4% year-on-year rise in temporary recruitment fees offset a difficult permanent jobs market, with fees down 7% in the three months to March 31.

The performance marks an improvement on the 6% fall in UK and Ireland fees seen during the first half, although tough action on costs helped the division claw its way out of the red with interim operating profits of £500,000 against losses of £3.1 million a year earlier.

Overall group fees fell 3% in the third quarter due to a tougher quarter in Australia, where net fees plunged 18%. But Hays said annual earnings were now expected at the top end of City expectations thanks to further cost savings and a robust temporary recruitment market, which now accounts for 59% of total fees.

Alistair Cox, chief executive of Hays, said: "We have delivered a resilient performance against an economic backdrop that continues to be mixed and fragile overall. The start to the second half in our key temporary and contractor markets has been encouraging and although many permanent markets remain challenging, they are broadly stable."

Shares lifted 5% as Investec Securities analyst Sebastien Jantet said he believed better-than-expected trading in the UK was key to the group's improved outlook.

The group's UK public sector division saw net fees rise 17% as it continued to benefit from job "churn" and amid good performances in the education and healthcare sectors Private sector fees dropped 6% as the banking and finance sector remained under pressure.

Its largest division, covering Continental Europe and other overseas markets, delivered net fee growth of 4% thanks to a robust recruitment market in Germany.
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