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Staffing firm PageGroup says UK market 'fragile' after Brexit
October 11, 2016 / 6:39 AM / a year ago

Staffing firm PageGroup says UK market 'fragile' after Brexit

(Reuters) - Confidence among employers in Britain is “fragile” following the country’s vote to leave the European Union, with multinational firms holding off from hiring, particularly in the financial services sector, recruiter PageGroup (PAGE.L) said on Tuesday.

City workers head to work during the morning rush hour in Southwark in central London, Britain April 16, 2014. REUTERS/Toby Melville/File Photo

The company, which makes about a quarter of its earnings in Britain, said its gross profit there fell 4.7 percent in the three months to Sept. 30 at constant currencies and it would cut about 20-30 UK jobs if there was no improvement this quarter.

“At the moment they’re slightly fewer jobs and (firms are) taking slightly longer to turn jobs into new appointments .... It’s that sort of caution we’re talking about, rather than jobs getting pulled,” Chief Executive Steve Ingham told Reuters, adding he did not expect the British recruitment market to recover this quarter.

Although British consumers have taken “Brexit” in their stride, helping the economy show some resilience, surveys released on Monday suggested firms are cautious about investing, stoking fears unemployment could rise.

PageGroup, which mainly finds candidates to fill permanent positions, said employers were particularly wary when recruiting for higher paid jobs.

The company is the first UK recruiter to give an insight on hiring trends after the Brexit vote in June. Staffing firms such as PageGroup, Hays (HAYS.L), Robert Walters (RWA.L) and SThree (STHR.L) are seen as gauges of wider economic health because people tend to switch jobs more often when confidence rises.

The 4.7 percent drop in PageGroup’s UK gross profit to 37.8 million pounds ($47 million) in the third quarter was steeper than the 2.3 percent fall in the previous quarter, but less than four analysts forecast, as hiring for lower paid and temporary positions held up better than expected.

That could be good news for Hays, which has a strong UK position in such roles, Morgan Stanley analysts wrote in a note.

Hays, which reports quarterly results on Tuesday, said last month hiring in Britain weakened sharply after Brexit. Robert Walters reports results on Monday, having previously blamed Brexit for lower first-half profit.

PageGroup shares were up 4.2 percent to 363.6 pence at 1025 GMT. Hays and Robert Walters were both up 2.5 percent.

PageGroup’s worldwide gross profit rose 1.3 percent at constant currencies to 158.6 million pounds, helped by strong growth in Latin America outside of Brazil and in continental Europe - indicating the concerns around Brexit have not yet spread to the rest of the region.

It announced interim and special dividends totalling 31.7 million pounds from its cash pile of about 100 million. Morgan Stanley expects a similar payout in the first half of 2017.

Reporting by Esha Vaish in Bengaluru; Editing by Kate Holton and Mark Potter

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