The gloom in the staffing industry has deepened following a statement by Robert Walters that trading was deteriorating.

The company said that business in the ‘majority of its markets’ had deteriorated over recent weeks, with permanent and IT businesses particularly affected.

One bright spot was the contract business outside IT, which the statement said was ‘more resilient’.

The company warned that it might not be able to record results in line with analysts’ worst predictions.

‘Although the current economic environment and the nature of the business make it very difficult to look ahead, the company expects the trading outcome for the full year to be slightly below the lower end of analyst expectations,’ a spokesman said.

The spokesman said the company was attempting to cut costs, but ruled out making knee-jerk reactions to the economic situation so the company could take advantage of any upturn.

In a morning note, Merrill Lynch said that figures from the US did not yet point to a recovery in the industry. Q3 earnings from Robert Half and Manpower suggested the staffing market was deteriorating globally, with Half’s permanent placement revenues dropping by 40%.

However European staffing companies fared better, with Merrill urging investors to ‘accumulate’ shares in Hays and Michael Page in the medium term, with Adecco rated ‘neutral’.