UK economy: Another recruiter reports dramatic fee fall as hiring market clams up
UK economy watchers were this morning alarmed by a fall in fee income at one of the country’s biggest recruiters, with the firm’s often serving as a canary in the coalmine for the state of the jobs market.
Fee income slipped again at Robert Walters in the final quarter but the recruitment firm maintained its guidance for pretax profit across 2023 as a whole, it said in a statement to markets this morning.
Globally, net fee income was down 13 per cent in the three months to December reflecting the “challenging macro-economic conditions” across its core markets.
In the UK, which makes up 15 per cent of Robert Walters’ revenue, fee income was down 19 per cent.
“Activity levels remain more resilient in the regions compared to London,” the company said.
In Asia-Pacific, which makes up 43 per cent of its income, fees slipped 15 per cent with Australia performing particularly poorly.
It is the second downbeat update from a recruiter this week, after Hays reported a similar downward turn in the market.
Headcount at Robert Walters was also cut five per cent quarter-on-quarter as the firm said it was concentrating on “driving consultant productivity” in a tough economy.
“Despite the challenging macro-economic conditions, the Group has delivered a resilient fourth quarter and FY23 profit before tax will be in line with market expectations,” Toby Fowlston, chief executive, said.
Robert Walters will deliver its final results on 7 March. Company-compiled consensus suggests the firm will make £20.5m.
Recruitment firms are often seen as a bellwether for the health of the UK’s labour market and wider economy.
Robert Walters specialises in sourcing talent for the City’s biggest banks, brokers and insurers, many of which have been looking to lay people off in recent months, reflecting the muted market backdrop.
Earlier this week fellow FTSE 100 recruitment firm Hays reported that fees were down 15 per cent in the final quarter of 2023 compared to the same period a year earlier. In the UK specifically, fees were down 17 per cent.
The slowdown means Hays now expects its first-half profit to be below expectations at around £60m compared to analyst consensus of over £70m.
Hays chief executive, Dirk Hahn, said that the firm expects “near-term market conditions to remain challenging”.