PageGroup warns over annual earnings amid tougher jobs market

Recruitment firm PageGroup has warned over annual earnings as firms rein in pay offers and job seekers increasingly turn down new roles amid economic uncertainty.

The firm reported a 10.5% drop in group-wide gross profit over the three months to September 30, down 7.9% on a constant currency basis.

The UK was among countries hit hardest amid the more difficult jobs market, with gross profits tumbling 18.9%.

PageGroup said it was seeing hiring take longer as candidates are becoming more reluctant to accept new jobs, due in part to the smaller increases in salaries being offered, as well as moves by current employers to retain workers.

The firm said it now expects full-year operating profits to fall to between £125 million and £130 million, excluding a £5 million up-front hit from cost-cutting moves.

It had previously guided in July for operating profits of £137.6 million.

The outturn would mark a sharp drop on the £196.1 million earnings reported in 2022.

Nicholas Kirk, chief executive of PageGroup, said: “Europe, Middle East and Africa was our best performing region – however, tough market conditions affected our performances in Asia, the UK and the US.

“Salary levels remain elevated, albeit the salary increases offered to candidates reduced compared to the third quarter 2022.

“These lower offers, combined with lower candidate confidence, led to a further increase in the number of offers rejected by candidates, either through employer buybacks or unwillingness to risk the move for the size of incentive on offer.

“The increased time to hire that we saw in the second quarter continued.”

He added: “Looking ahead, due to a slower end to the quarter, there is a heightened degree of uncertainty in the short term.”

PageGroup is slashing its own costs in the face of tougher trading, cutting its fee-earner workforce by another 310 roles, or 4.8%, in the third quarter.

It has now trimmed its total workforce by 10.7% year-on-year to 8,140.

Cost-cutting actions are set to deliver annual savings of £20 million from 2024 onwards, but will lead to a net £5 million impact in 2023.