Recruiter PageGroup sees 29% slump in annual profit on tough market conditions

(Reuters) -PageGroup on Monday became the latest recruiter to warn of tough conditions in the labour market as it forecast a near 29% slump in 2023 profit, partly hit by weakness in the technology and banking sectors in the United States.

Lower levels of both candidate and client confidence have resulted in delays in decision-making and candidates are being more reluctant to accept offers, CEO Nicholas Kirk said.

PageGroup along with peers Hays and Robert Walters have flagged weakness in the permanent hiring market because employers were turning to interim hires to ride out market uncertainty amid a tough economic outlook.

PageGroup, which focuses on helping employers find permanent staff, said the challenging conditions it experienced towards the end of 2022 have continued into 2023.

PageGroup’s gross profit in permanent recruitment fell 7.2% in the first quarter on constant currency terms, while temporary jobs jumped about 15%.

It now expects annual operating profit to be in line with a company-compiled consensus of 140 million pounds ($173.9 million), way below the 196.1 million pounds it reported for fiscal year 2022.

High inflation and persistent recession worries have forced many companies to cut jobs or freeze hiring, and prefer temporary hiring over permanent roles in their bid to minimise potential risks.

PageGroup, which runs Page Executive and Michael Page and operates in around 40 countries, said gross profit from its U.S. business declined 15%, hurt by its technology and banking disciplines.

The recent collapse of U.S.-based, tech-focused Silicon Valley Bank and its ripple effect on the global banking sector have fuelled fears of a tighter lending environment, further weighing on the job market.

RBC analysts said the strength in temporary jobs outlined by Page are consistent with the narrative by rivals, adding that lower candidate confidence is feeding into lower offer acceptance rates in the permanent staffing segment.

The FTSE midcap firm also posted a 2.4% decline in gross profit at 262.7 million pounds for the three months to March 31.

($1 = 0.8054 pounds)

(Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Uttaresh Venkateshwaran and Christopher Cushing)