A recent report by financial publisher Plimsoll has predicted that more than 9,000 jobs could go in the recruitment industry over the next year as a result of the worsening economic climate.

The report comes as evidence mounts that the credit crunch, and rising input costs, are beginning to hit the real economy.

House builder Persimmon recently announced it was cutting 2,000 jobs, while a further 6,000 job losses are planned by other house builders. JCB also announced 500 jobs would go.

A survey by the British Chambers of Commerce found that activity in the manufacturing and services sectors had slowed over the past three months and suggested that unemployment could rise by up to 300,000 over the next 12 months.

Plimsoll's report is a massive deterioration on the company's previous report in January, which predicted that most recruiters were set to ride out the economic storm.

The new research analysed 1,487 recruiters and assessed each company's chances of survival, breaking them down into three groups, and in each case suggesting steps they need to take to charter a way through the choppy economic waters.

According to Plimsoll, 168 (11%) of those companies surveyed are already losing money and need to take drastic action to shrink their business. Some of these firms could see 30% of the workforce go as they try to stay in business.

Assuming there are around 15,000 recruitment businesses in the UK, Plimsoll's analysis would suggest that up to 1,693 recruiters need to take urgent action to survive.

Another 536 (36%) of those researched, only need to "tweak" their business by making small changes.

The remaining 783 (53%) are doing well and look likely to benefit from the weakness of their competitors. David Pattison, a senior analyst at Plimsoll, said the sudden deterioration had been due to the worsening economy.

The report suggests worrying times lie ahead for recruiters, but how badly will they really be affected?

Dave Way, managing director of financial services and banking recruiter WH Marks Sattin, said he had been expecting the downturn for the past six months.

"I think you would be a bit naïve if a few companies didn't drop off," he said. And he predicted there would be further consolidation in the recruitment industry as firms amalgamate.

If the Plimsoll report is right, there is no doubt that many recruiters will have to cut their costs to survive. As Pattison said: "It's just good management." And with staff salaries making up a large proportion of those costs, getting rid of staff will in some cases be a necessity.

"The only absolute certainty is that you cannot do nothing," Pattison added.

Some recruiters have already taken action to "tweak" their business. John Durrant, who runs the quantitative analytics desk at financial recruiter Selby Jennings in the City, said the company has switched its staff resources away from credit market recruitment, which has "taken a massive hit", and into areas like commodity market recruitment that has been very strong.

For many in the industry, however, the economic situation though a concern is not yet threatening. Clive Davis, a director at Robert Half, said: "I suspect it's not yet survival of the fittest."

However, this does not mean recruiters will escape the crunch.

A recruiter's ability to weather the storm will depend on how well organised it is, said Davis.

Those most likely to be casualties are those who have either grown too fast or are over-dependent on one client. Where a recruiter is heavily reliant on one client, and that client asks for more generous payment terms, then the recruiter could easily get into trouble, he warned.

Sue Dodd, owner and director of business intelligence consultancy Agile Intelligence, said we are just "seeing the beginning" in terms of recruiters going out of business.

She predicted the downturn would spread into general office clerical, blue collar and eventually into sectors such as sales. "It's going to get a lot worse before it gets any easier," she warned.

However, she believes that not all recruiters will be equally affected. For example, construction recruiters involved in supplying big infrastructure projects "will probably sail through without noticing".

Recruiters in significant candidate shortage areas, such as technical and engineering staff, will also be relatively cushioned, she said.

However, though Dodd believes the industry is unlikely to see any upturn "earlier than 2010", she said "it's not all bad news".

While those recruiters who are currently losing money — around a fifth, according to Dodd — are most susceptible to any downturn, for those who are well funded and have a good strategy, it's an opportunity, she argued.

"Ultimately, this will result in a stronger, leaner recruitment industry," she added.

With the economic news worsening by the day, the recruitment industry is bound to take a hit. But while the consensus is that some jobs and indeed some companies will go, the picture looks likely to be patchy with not all sectors of the industry equally affected.