UK hit by recruitment slowdown, as Christmas sales disappoint – business live
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December has been a cruel month for UK recruiters, and retailers.
Hays, the global recruitment consultants, has reported that its fees – earned by placing candidates into roles) – fell by 15% last month, as demand from companies looking to fill vacancies slowed.
This led to a 10% drop in earnings across the last quarter, and the slowdown means Hays expects to miss market expectations for profits in the first half of its financial year.
The company is now accelerating its cost reduction and efficiency programmes, and cut its consultant headcount by 5% in the October-December quarter.
In the UK & Ireland, Hays reports that fees fell 17% in the last quarter, including a 13% drop in income from temporary positions and a 21% drop in permanent fees.
The slowdown went further too, with Australia & New Zealand fees down 20%, Asia down 11%, and the Americas down 25%.
Dirk Hahn, Hays chief executive, says it is “too early to say” if December’s weakness shows a sustained market slowdown, or rather that some placements are simply being deferred.
But, Hahn warns, near-term market conditions are expected to remain challenging, citing increased uncertainties and reduced client and candidate confidence.
He told shareholders:
“Overall market conditions became increasingly challenging through the quarter, including a clear slowdown in most markets in December, notably in our Perm businesses as client and candidate decision-making slowed. Temp volumes remained broadly stable sequentially through the quarter, but declined YoY as we did not see our normal seasonal step-up in worker volumes.
As a result, we expect operating profit in our first half to be c.£60 million, despite our ongoing actions to reduce costs.
UK shoppers also cut back last month, leaving retailers suffering a disappointing festive period, new data this morning shows.
Total sales grew 1.7% in December, down from almost 7% growth a year earlier, the British Retail Consortium and consultancy KPMG have reported.
Their report shows there was a slight increase spending in the week leading up to Christmas as consumers scrambled to purchase last-minute gifts. But shoppers shunned clothing, jewellery and technology gifts, opting instead for beauty, health and personal care products, while toys and gaming also sold well.
And households remained cautious about making larger purchases in the post-Christmas sales.
Helen Dickinson, chief executive of the BRC, says:
“The festive period failed to make amends for a challenging year of sluggish retail sales growth.
“Weak consumer confidence continued to hold back spending.”
Also coming up today
Boeing is facing an escalating crisis after loose parts were discovered on some grounded 737 Max jets, days after an Alaska Airlines plane suffered a mid-air blowout on Friday.
Alaska Airlines indicated that its maintenance technicians had found issues when inspecting their 737 Max 9 fleet, saying:
“Initial reports from our technicians indicate some loose hardware was visible on some aircraft”.
The problems don’t end there either; United Airlines said yesterday it had found loose bolts and other “installation issues” on multiple 737 Max 9 aircraft.
Boeing’s shares fell 8% yesterday, as investors pondered the possible fallout from the accident.
The agenda
7am GMT: German industrial production for November
7.45am GMT: French trade balance for November
10am GMT: Eurozone unemployment report for November
10am GMT: Business and Trade Committee to quiz Asda co-owners TDR Capital
1.30pm GMT: US trade deficit figures for November
3pm GMT: RealClearMarkets/TIPP index of US Economic Optimism Index