Recruitment firm Hays reported flat net fees in the first quarter as Brexit uncertainty dampened hiring activity in the UK.
The company said there was strong hiring in the US and China, however, Germany, the company’s largest market, reported flat net fees.
Like-for-like net fees in the group’s temporary and permanent businesses were flat year-on-year.
Net fees in the UK and Ireland declined four per cent in the year driven by a seven per cent drop in private sector businesses. Both business and candidate confidence declined in the quarter. In London, fees fell two per cent, the company said today.
Shares were up 4.87 per cent this morning despite the disappointing trading update due to low expectations in the market.
Rival recruitment firms Pagegroup and Robert Walters both issued profit warnings last week due to geopolitical issues including Brexit uncertainty and protests in Hong Kong.
“Unsurprisingly, business in the UK and Ireland is under particular strain as businesses put hiring on hold while they await clarity on the Brexit situation,” Russ Mould, investment director at AJ Bell, said.
“It is no surprise to see that here, net fee income, a key metric for recruitment firms, is retreating.
“It is Germany, the company’s largest market, which is likely to be causing more concern and investors may be taking the reporting of flat net fees for this part of the business as a win given the strain on the country’s automotive and manufacturing sectors.”
Alistair Cox, chief executive at Hays, said: “Looking ahead, our strong market positions, combined with our highly experienced management teams and financial strength, means I am confident we will continue to appropriately balance investing for the long-term while managing the more challenging markets we currently face.”