Reports of plunging world markets, increases in redundancies and a slowdown in hiring are all painting a gloomy year ahead for recruiters. But is it all tabloid hot air?

Yes, according to global creative and marketing recruiter Aquent, which has active contracts with half of the FTSE 100 companies.

According to European managing director Stefan Ciecierski, there is no evidence that large companies are resisting taking on staff due to a coming slowdown.

"Let's get this right," Ciecierski told Recruiter. "The UK economy is not yet suffering from a recession. The tabloids can speculate all they want, but the reality is that there are more jobs on offer this month than last month when nobody was talking about a recession. We have seen no fall in demand. If a recession does come, it will be caused as much by negative sentiment and emotive reporting than the realities of business and economic fundamentals."

Aquent remains bullish about the economic prospects for 2008, and even plans to open new offices in Lyon, Hamburg and Frankfurt.

"I think we will see a slower six months, but by the second half of the year, the economy should be back on track. And if there is a recession, creatives will need to adapt. Moving into high demand areas such as digital and interactive jobs is advisable, as is constantly updating your skills and being flexible about job offers you receive," added Ciecierski.

However, economic reports published last week suggest that it is going to be a rocky 12 months for business. The price of inflation on goods leaving UK factories has reached a 16-year high, driven by higher petrol and food costs, according to the Office for National Statistics.

And small and medium firms expect domestic orders to fall as rising costs eat into their profits, reports the Confederation of British Industry.

The CIPD/KPMG Labour Market Survey shows 38% of employers intend to make redundancies this quarter, a sharp increase on last autumn's figures and the highest since the survey began in 2004.

John Philpott, CIPD's chief economist, told Recruiter: "Employers' initial reaction was to hold fire and take stock of the emerging situation. But a substantial number now expect to trim their workforces in the private sector, squeezed by a combination of tougher trading conditions and higher costs, and in the public sector because they are being required to make further efficiency savings and cope with tighter budget settlements."

However, Philpott added that net recruitment activity was still positive and signs of mounting employer pessimism shouldn't be read as evidence of a job market "approaching meltdown". He added: "It does suggest that the UK is entering a period of slower employment growth and somewhat greater job insecurity than in recent years."

The CIPD is not the only organisation to voice concern. Manpower's Employment Outlook Survey for Q1 2008 warns employers' hiring rates will fall to their lowest levels for six years between January and March, taking it to a net total of +7%.

"Hiring confidence among employers in the finance and business services sectors — the most consistently strong performing sector in recent years — has eased by a significant 12% over Q4 2007 and 16% over the year," said Mark Cahill, managing director of Manpower UK.

Cahill added that the construction sector experienced a downbeat -5%, although most employers in the sector (80%) are predicting a period of stability, and report no change in headcount.

He said talk of a credit crunch, concerns over interest rates and house prices have all added to create uncertainty for employers and employees but added: "It is important to note that the overall picture remains positive — hiring growth is easing but there are still more employers taking on staff than easing headcount."

The continued demand for experienced workers is contributing to the UK skills shortage as companies struggle to fill vacancies.

Despite economic uncertainty, the latest bi-annual survey by the Association of Graduate Recruiters (AGR) predicts vacancies for graduates will rise by 16.4% in 2008, the highest increase in 10 years, and average salaries will increase on average by 2.1%, bringing the median graduate salary to £24,000.

There is, however, a note of caution, with 67% of recruiters reporting to the AGR that they will struggle to fill vacancies. Carl Gilleard, AGR's chief executive, said: "The fact that employers are beginning to widen their recruitment field outside of the UK may have wider long-term implications for the UK economy, and both employers and graduates may have to amend their expectations to narrow this gap."

Lai Wah Co, principal economist at the CBI, said the UK was seeing a lull in the economy following an "unprecedented period of growth in the labour market and record high employment".

She told Recruiter: "The labour market responds to economic activity in a time lag. So we expect to see some easing in the labour market and slower employment. We will still have employment growth, it will just be slower."

She expects to see continued key skills shortages in engineering and quantity surveying, but recruitment here will not "dry up" altogether.

The latest research from Deloitte also suggests that talk of a UK recession is exaggerated with a 7% fall in the number of recruitment and business services companies going into administration in 2007, mirroring the economy as a whole.

But Lee Manning, reorganisation and services partner at Deloitte, warned: "With anticipated job losses of up to 20,000 in the City, and the downturn of volumes in construction, there could conceivably be an impact on recruitment agencies."