The UK is the place to be
14 August 2014
The latest Recruitment and Employment Confederation (REC) and KPMG Report on Jobs points to a healthy labour market in the UK. Staffing agencies are reporting that momentum is accelerating, with a trend towards higher levels of permanent and temporary placements.
Thu, 14 Aug 2014 | By Adrian Kearsey, head of research for smaller companies, Sanlam Securities UK
The latest Recruitment and Employment Confederation (REC) and KPMG Report on Jobs points to a healthy labour market in the UK. Staffing agencies are reporting that momentum is accelerating, with a trend towards higher levels of permanent and temporary placements. This favourable environment contrasts with Europe, where the rate of growth is either slowing or remains negative. Investors are clearly backing this trend, with UK-focused recruitment companies such as Matchtech and Staffline outperforming their larger, internationally driven peers including Page, Hays and SThree.
Maintaining the positive trend of recent months, the latest REC report highlights the strong growth in placements across the whole of the UK – especially in the South East. Perm placements are at a five-month high and temp placements at a seven-month high. This growth is especially impressive given that we are in the middle of the summer lull.
The prospect for continued growth is strong, with a trend for a rise in available job vacancies. As a consequence, we expect the UK staffers to see further increases in activity as we move into the autumn, though we are mindful recruiters have a painfully short window of visibility.
The shortage of available candidates is accelerating. Indeed, the contraction in perm candidate availability experienced its sharpest decline since the survey commenced in 1997, and temp availability contracted at its fastest rate since March 1998. Combined with strong demand, this contraction is creating an ever-tighter labour market, which is continuing to drive starting salaries higher.
Private sector placements are outpacing those in the public sector. However, both remain relatively strong and, given we are in the run-up to the next general election, public sector activity is likely to remain robust. The recent trading update from Hays highlights these trends, with recent UK private sector net fee income increasing 12% year on year in the second quarter and public sector net fee income increasing 8%. In terms of sectors, construction and engineering are at the top of the leader board. This demand was reflected in the recent trading update from Matchtech. The specialist recruiter, which focuses on UK technical disciplines such as infrastructure engineers, said fees were up 18% to £45.2m over the past 12 months.
The latest REC report merely reiterates the message from previous releases, pointing to a healthy UK labour market. This message will clearly put pressure on the Bank of England, but also reinforces our view that investors should be ‘overweight’ on UK-focused recruitment companies. The two mid-sized UK-focused plays – Matchtech and Staffline, which are delivering superior growth – have outperformed their larger internationally oriented peers – Hays, Page and SThree. The UK companies are also avoiding foreign exchange headwinds, yet are still trading on material valuation discounts.
Maintaining the positive trend of recent months, the latest REC report highlights the strong growth in placements across the whole of the UK – especially in the South East. Perm placements are at a five-month high and temp placements at a seven-month high. This growth is especially impressive given that we are in the middle of the summer lull.
The prospect for continued growth is strong, with a trend for a rise in available job vacancies. As a consequence, we expect the UK staffers to see further increases in activity as we move into the autumn, though we are mindful recruiters have a painfully short window of visibility.
The shortage of available candidates is accelerating. Indeed, the contraction in perm candidate availability experienced its sharpest decline since the survey commenced in 1997, and temp availability contracted at its fastest rate since March 1998. Combined with strong demand, this contraction is creating an ever-tighter labour market, which is continuing to drive starting salaries higher.
Private sector placements are outpacing those in the public sector. However, both remain relatively strong and, given we are in the run-up to the next general election, public sector activity is likely to remain robust. The recent trading update from Hays highlights these trends, with recent UK private sector net fee income increasing 12% year on year in the second quarter and public sector net fee income increasing 8%. In terms of sectors, construction and engineering are at the top of the leader board. This demand was reflected in the recent trading update from Matchtech. The specialist recruiter, which focuses on UK technical disciplines such as infrastructure engineers, said fees were up 18% to £45.2m over the past 12 months.
The latest REC report merely reiterates the message from previous releases, pointing to a healthy UK labour market. This message will clearly put pressure on the Bank of England, but also reinforces our view that investors should be ‘overweight’ on UK-focused recruitment companies. The two mid-sized UK-focused plays – Matchtech and Staffline, which are delivering superior growth – have outperformed their larger internationally oriented peers – Hays, Page and SThree. The UK companies are also avoiding foreign exchange headwinds, yet are still trading on material valuation discounts.
