The decline in recruitment company SThree’s British business accelerated at the start of the year, with Brexit uncertainty and public sector cuts weighing on its first-quarter profits.
Overall gross profit in the three months to February 28 was little changed from the previous year when taking into account the impact of currency moves. But it was supported growth in the USA and Europe, with UK and Ireland profits falling by 19 per cent to £13m.
Many recruiters reported a temporary slowdown in hiring in the immediate aftermath of last June’s Brexit vote, but the economy’s unexpected resilience since has not helped SThree’s profits to recover. The 19 per cent drop over the last three months was worse than 12 per cent in the fourth quarter, and marks its fourth consecutive quarter of decline.
Permanent hires were particularly badly hit, with UK profits down 37 per cent year on year. The balance between permanent and temporary hires often reflects business sentiment, with companies making fewer permanent hires when faced with economic uncertainty.
Gary Elden, SThree chief executive, said:
Our contract business continues to grow robustly. We were also pleased to see momentum re-established in the USA, where gross profit grew by 12 per cent in the first quarter, a significant acceleration from H2 2016.
Looking ahead, political and macro-economic uncertainty remains at heightened levels in a number of our key regions. Against this background, we are managing the business prudently and continue to invest in our highest performing teams. Our focus on contract, the continued strength of our performance in continental Europe, our greater momentum in the USA and firm control of our cost base leave us well positioned for the future.