The recruitment sector is set for gradual recovery this year, according to a report from market intelligence provider Key Note.

The report forecasts that the value of the permanent recruitment market will decline by a further 4.2% in the year ending March 2010, adding that a recovery is more likely to be sustained in the second half than in the first half of the year. Growth in employment levels usually lags behind growth in the economy suggesting that demand for new staff will not start to emerge strongly until the second half of 2010.

In the year ending March 2009, the value of the permanent recruitment market dropped by 39% to £2.61bn on the previous year, while the number of permanent placements fell by 19.8% to 582,803.  

The report shows that  the financial services, construction, property and retailing sectors were particularly affected.  Key Note anticpiates that sectors likely to show some reasonable improvement in 2010 include utilities, social care, financial services and technical/engineering and of these, technical/engineering and social care are likely to be significant growth areas.

And it adds that overall, the immediate outlook for the permanent staff recruitment market is better than it was for 2009, but it remains weak, adding that the market will still be intensely competitive in 2010, and that total revenue will decline, before beginning a slow recovery to finish the forecast period (2010 to 2014) at £3.1bn.

The report also predicts that fee rates are unlikely to rise in 2010 and may even be squeezed further, with the recovery coming too late for some recruiters.