Jobs growth shows recovery is taking hold, says Hays

The recovery has become entrenched, according to recruitment group Hays, which reported quarterly growth of 8pc and is seeing clear evidence of confidence among both jobseekers and companies looking to hire.

Hays shares were up 5pc in early trade, topping the FTSE 250, after the business reported the 8pc like-for-like rise in the fees it charges for placing candidates in jobs. On a headline basis the rise was 1pc.

In the UK the rise was even bigger, jumping 14pc on a like-for-like basis and marking the strongest increase in six years. Continental Europe and the rest of the world were almost as good, gaining 11pc. Net fees in the Asia Pacific region contracted 4pc.

Paul Venables, finance director, said: “The acceleration of growth exceeded our best expectations. We are a big business so it’s a good indication of the state of the economy. We saw 1pc growth three quarters ago, then 2pc, then 3pc so this is a big pick-up.”

Trends in certain sectors also highlighted the health of the British economy, said Mr Venables.

“The UK has been excellent, with 25pc growth in permanent placements. Accounting and finance has also risen 21pc which is important because no company wakes up and suddenly decides, ‘We need to hire more finance people’.”

He added that staff in accountancy and finance are known within the recruitment industry to be the most conservative when it comes to changing jobs and for them to start to moving jobs signals bullishness.

“They’ve got confidence in their own financial position and the economy to feel they can change jobs. It’s not like the construction industry which is bouncing back strongly but that’s no surprise because it was hardest hit during the crisis.”

He added the growth was nationwide, with regions such as the Midlands growing 33pc. Even London saw 8pc growth, and banking, one of the hardest hit sectors in the crisis growing 2pc.

Companies that previously would have held off filling vacancies created by people leaving are now looking to fill them straight away, Mr Venables said, something which smaller businesses had been particularly reluctant to do until recently.

Looking abroad, Mr Venables said that Australia had at last bottomed out and Germany was seeing growth of 8pc.

As a result, Hays has upgraded its earnings forecast for the year from £135m to the top end of the consensus estimates at £141m.

Mr Venables hinted that the dividend could also rise, saying that Hays had stated that an increase would be considered when earning hit £140m.

“There is a board meeting [which will consider the dividend] in August and we have given clear guidance,” Mr Venables said. “Shareholders have been rewarded with the share price recently and are likely to be rewarded with the dividend.”

Amrit Panesar, senior trader at Accendo Markets, said: “Hiring looks to be back in full force, as Hays expects its full-year operating profit to come in at top end of analyst forecasts. Strong growth has been seen in Continental Europe, and permanent placements have been on the increase, further fuelling feeling that the economy is finally getting back on track.

“Bar a few dips in the markets recently, it certainly seems companies are once again looking out for talent to increase business revenues. Hays shares are currently trading at levels not seen since 2007, talk about a pre-crisis recovery.”