London Daily

Focus on the big picture.
Saturday, Aug 02, 2025

Profit warnings at recruitment firms show unemployment is likely to rise

Profit warnings at recruitment firms show unemployment is likely to rise

Warnings from Robert Walters and Pagegroup, two major recruitment firms, show the industry is feeling the pinch from the tech sector and the broader economic slowdowns.
With recessions expected in many parts of the world during 2023, it is highly likely that unemployment will rise in a number of economies this year.

Supporting that argument are twin profits warnings during the last 48 hours from two of the UK stock market's best-known recruitment firms, Robert Walters and Pagegroup.

Tuesday saw Robert Walters, which specialises in placing professionals in fields such as accountancy, banking and engineering, warning of "difficult market conditions".

The company indicated it has been hit by the slowdown in the tech sector - which shed an estimated 150,000 jobs globally last year - in the US in particular. It said that, during the final three months of last year, "tough market conditions across the US resulted in a significant decline in net fee income".

Robert Walters, whose tech sector clients include Netflix and Amazon, said its net fee income during the quarter was down 2% in Japan and 3% in Australia, while net fee income in mainland China was down 24% year-on-year due largely to COVID disruption and related restrictions.

The company's founder and chief executive, Robert Walters, added: "The global macro-economic backdrop became increasingly uncertain as the quarter progressed, resulting in a softening of recruitment activity levels across many of the group's markets."

News that profits for the year would be less than the market was expecting, although still a record, sent the shares down 5% at one point before they closed down 3.3%.

A second, broader warning

That warning was followed by one today from the larger Pagegroup.

The company, which employs 9,000 people in 37 countries around the world, is more broad-based than Robert Walters as it covers four different areas of recruitment - executive search, qualified professional, clerical professional and outsourcing.

It, too, is set to report record results for 2022 as a whole but, like its rival, had to warn of a slowdown in business during the final three months of the year.

Nicholas Kirk, who succeeded Steve Ingham at the end of last year, said: "As the quarter progressed, conditions became increasingly challenging, and we saw a reduction in both candidate and client confidence, leading to further delays in decision-making, as well as candidates being more reluctant to accept offers.

"Due to these tougher trading conditions, gross profit per fee earner, our measure of productivity, declined 12% compared to [the final three months of] 2021."

He singled out "increased caution amongst both clients and candidates" in France in December, while in the United States, a slowdown in housebuilding hit activity in construction, the company's biggest business in the country. China and Hong Kong, as with Robert Walters, were also hit by COVID.

'Challenging trading conditions' in the UK

In the UK, where the company trades under the Michael Page banner under which it began life in 1976, profits for the final three months of the year were down 1.9% on the same period in 2021.

The company added: "We saw more clients deferring hiring decisions and candidates becoming increasingly cautious about accepting offers."

It said that, reflecting more challenging trading conditions, it cut the number of fee earners it employs by 26 during the period.

Shares of Pagegroup, which fell by 7% on the back of the Robert Walters profits warning on Tuesday, have however rallied today by 4% in a recognition that the sell-off the day before might have been overdone.

But the twin warnings have cast a cloud over the sector and particularly because two more staffing groups, Hays and SThree, both warned at the end of last year about a slowdown in trading.

Graham Brown, analyst at broker Stifel, told clients this morning: "It appears that the softening macro environment is now catching up with the staffers."

What job losses tell us

Unemployment tends to be a lagging indicator, in the jargon, of what is happening in an economy. Job losses usually only take place after an economy has begun to slow.

The recruitment and staffing firms tend not to be, though, because they see a slowdown in client activity and a weakening of confidence among those looking for new jobs long before those translate into a slowdown in employment.

So they can be seen as signals of what is happening in the here and now.

The bad news to have come from the sector in recent days and weeks underline the fact that the tough medicine being administered by central banks - interest rate rises - to tackle inflation is having an impact on the jobs market.

The central banks may take comfort from that, in that a weaker jobs market might ordinarily bear down on wage inflation, were it not for evidence that, particularly in sectors where there are skills shortages, workers in demand are still able to command inflation-busting salary increases.

So central banks might also be forgiven for worrying that their recent interest rate hikes are starting to have unwanted side effects.

That said, it is important to keep these trading updates in perspective. Both Robert Walters and Pagegroup have just said they expect to report record profits for 2022, albeit not quite as good as expected.

And the fourth quarter of 2022 was always going to be difficult, in terms of year-on-year comparisons, due to the way business picked up in the final three months of 2021 as COVID restrictions around the world began to fall away.

As Tom Callan, analyst at the investment bank Investec, put it today in a note to clients: "The prior year comparator was extremely tough, in our view, and thus we view this as more of a mean reversion as opposed to anything more pervasive."

The alerts do mean, though, that the sector will be under greater scrutiny in coming months than perhaps it has been used to.
Newsletter

Related Articles

0:00
0:00
Close
Trump Administration Finalizes Broad Tariff Increases on Global Trade Partners
J.K. Rowling Limits Public Engagements Citing Safety Fears
JD.com Launches €2.2 Billion Bid for German Electronics Retailer Ceconomy
Azerbaijan Proceeds with Plan to Legalise Casinos on Artificial Islands
Former Judge Charged After Drunk Driving Crash Kills Comedian in Brazil
Jeff Bezos hasn’t paid a dollar in taxes for decades. He makes billions and pays $0 in taxes, LEGALLY
China Increases Use of Exit Bans Amid Rising U.S. Tensions
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
Procter & Gamble to Raise U.S. Prices to Offset One‑Billion‑Dollar Tariff Cost
House Republicans Move to Defund OECD Over Global Tax Dispute
Botswana Seeks Controlling Stake in De Beers as Anglo American Prepares Exit
Trump Administration Proposes Repeal of Obama‑Era Endangerment Finding, Dismantling Regulatory Basis for CO₂ Emissions Limits
France Opens Criminal Investigation into X Over Algorithm Manipulation Allegations
A family has been arrested in the UK for displaying the British flag
Mel Gibson refuses to work with Robert De Niro, saying, "Keep that woke clown away from me."
Trump Steamrolls EU in Landmark Trade Win: US–EU Trade Deal Imposes 15% Tariff on European Imports
ChatGPT CEO Sam Altman says people share personal info with ChatGPT but don’t know chats can be used as court evidence in legal cases.
The British propaganda channel BBC News lies again.
Deputy attorney general's second day of meeting with Ghislaine Maxwell has concluded
Controversial March in Switzerland Features Men Dressed in Nazi Uniforms
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
Thai Civilian Death Toll Rises to 12 in Cambodian Cross-Border Attacks
TSUNAMI: Trump Just Crossed the Rubicon—And There’s No Turning Back
Over 120 Criminal Cases Dismissed in Boston Amid Public Defender Shortage
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
Trump Announces $550 Billion Japanese Investment and New Trade Agreements with Indonesia and the Philippines
US Treasury Secretary Calls for Institutional Review of Federal Reserve Amid AI‑Driven Growth Expectations
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Severe Flooding in South Korea Claims Lives Amid Ongoing Rescue Operations
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Japanese Prime Minister Vows to Stay After Coalition Loses Upper House Majority
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
CEO Resigns Amid Controversy Over Relationship with HR Executive
Man Dies After Being Pulled Into MRI Machine Due to Metal Chain in New York Clinic
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
US Revokes Visas of Brazilian Corrupted Judges Amid Fake Bolsonaro Investigation
U.S. Congress Approves Rescissions Act Cutting Federal Funding for NPR and PBS
North Korea Restricts Foreign Tourist Access to New Seaside Resort
Brazil's Supreme Court Imposes Radical Restrictions on Former President Bolsonaro
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Judge Criticizes DOJ Over Secrecy in Dropping Charges Against Gang Leader
Apple Closes $16.5 Billion Tax Dispute With Ireland
Von der Leyen Faces Setback Over €2 Trillion EU Budget Proposal
UK and Germany Collaborate on Global Military Equipment Sales
Trump Plans Over 10% Tariffs on African and Caribbean Nations
Flying Taxi CEO Reclaims Billionaire Status After Stock Surge
×