Fri, 18 May 2012 | By Kean Marden, head of business services equity research, Jefferies International
With newspapers, the 10 O’Clock News and the web once again alight with stories of impending euro collapse, we’re back once again to a tedious rerun of 2008, 2010 and 2011.
Understandably, recruiter share prices have suffered in this environment with most declining by 10-20% over the past two weeks.
However, one company has bucked the trend. Healthcare Locums shares are up 35%, in part buoyed by news that chief executive Stephen Burke purchased 824,087 shares at 2.4p.
Even for a company whose shareholders engaged in a very public debate with the board in early 2011, Colin Cottell’s reports from the front line of the Bleasdale employment tribunal have made for captivating reading recently.
Despite European woes, UK labour market fundamentals have been positive recently. Unemployment fell by 45,000 to 2.6m in the first quarter, the lowest since last summer, while the number on jobseeker’s allowance declined by 13,700 to 1.6m.
The number of people in employment rose by 105,000 to 29.2m, which was the largest increase for a year, albeit driven by part-time rather than full-time positions. Although the decline in unemployment was the second consecutive monthly fall, we would characterise the UK labour market as flat and volatile at present rather than experiencing a steady recovery.
From the recruitment sector itself, trading updates have been mixed this week. Hydrogen’s AGM statement highlighted a lack of visibility in markets but temp and perm net fees were running ahead of last year.
Staffline was more upbeat, citing new business wins and good levels of demand for its OnSite offering. Adecco’s Q1 results contained some encouraging elements with the gross margin 0.5% ahead of analyst expectations and current trading momentum holding up better than feared.
Finally, hot on the heels of Stephen Puckett, Charles-Henri Dumon and Royston Hoggarth, yet another senior management change was announced last week when Russell Clements disclosed his intention to retire as chief executive of SThree next year.
His legacy is impressive: Russ and colleagues have built a major global recruitment agency through an entirely organic route and he was quick to appreciate the potential in Germany. However, from a personal perspective, I’ll miss his straight talking and ability to simplify an argument most.
Kean Marden, head of business services equity research, Jefferies International