More than a third of recruitment agencies are struggling to break even, averaging a -0.5% pre-tax profit margin, according to a study by analysts Plimsoll Publishing.

It found that more than one in five agencies have reported a loss for the year, for 21% of these companies this is now their second year of loss making.

However the study also found that two thirds of agencies are delivering outstanding returns, making 63% margins on average. The owners of these profitable companies are averaging a 41.8% return on their investment.