Brexit uncertainties continue to weigh heavily on various industries including recruitment. A good oversees performance so far this year from PageGroup (PAGE) is in stark contrast to a pedestrian turn from its UK operations.
Group profits are up 9.1% to £170.3m, a record first quarter for the staffing agency. The Americas and Europe/Middle East regions see rapid earnings growth. Even Asia Pacific nudged ahead in the three month period.
Investors like the trading update, triggering a 7.1% rise in its share price to 475.6p.
Take a closer look at the numbers and you’ll see the UK was the only part of the group not to show any profit improvement. This is important for investors because the territory accounts for one fifth of the group’s gross profit.
Chief executive Steve Ingham tells Shares that the firm was growing at 12-13% in the UK before Brexit hit and brought growth down to zero.
‘The reality is when sentiment is not confident, fewer people move jobs and also fewer clients want to hire.
‘If big multinationals don’t know about work visas and other details they’d be wary of hiring people,’ adds Ingham.
Analysts at investment bank Jefferies point out the UK figure is a vast improvement on its fourth quarter 2016 figure of losing 6.7%, so ‘flat’ performance is a move in the right direction. Barclays even forecasted an 11% drop in the UK for PageGroup’s first quarter.
In contrast, Robert Walters’ (RWA) first quarter numbers show a 27% increase in the firm’s UK profit on year-on-year basis.
Chief executive Robert Walters says he’s seeing ‘a good level of confidence’ in the UK but it should be said that the two recruiters have different business models and PageGroup is a significantly larger firm.
New figures from the Office for National Statistics show that UK employment show 1.56m people were unemployed between December 2016 and February 2017.
More companies took on extra staff, but the pace of improvement has slowed.
Tomorrow (13 Apr) we’ll get an update from Hays (HAS) which will shed further light on the strength - or lack of - the recruitment sector in the UK.
