The IT recruitment firm Harvey Nash has announced plans to buy its US-based counterpart SBS for $2.6m (£1.4m).

This is a clear indicator that Harvey Nash believes that the stuttering US economy will improve in the coming months, despite fears of a jobless recovery.

Chief executive David Higgins (pictured) said: “This represents an important step in developing our US business and gives Harvey Nash further geographical coverage and greater critical mass to take advantage of the economic recovery in the US.”

The company has also enjoyed improving business levels in both the UK and US markets, which performed better than the board expected. But subdued trading in mainland Europe took the sheen off the positive results elsewhere.

Harvey Nash is hoping the acquisition will increase its profile in the US, particularly on the East Coast where many of SBS’s offices are based.

In the year ended August 2003, SBS made pre-tax losses of $1.1m (£600,000) on turnover of $17.8m (£9.8m). But Harvey Nash hopes SBS, which has Fortune 500 clients in the insurance, banking and pharmaceutical sectors, will operate profitably under new stewardship.

Nash will fund the acquisition with a £1.7m share issue on London’s Alternative Investment Market.

The 2,050,000 new shares will be priced at 84p each and the cash raised will also cover the expenses incurred by the deal.

SBS went into administrative receivership in September after years of financial difficulties.

It was being funded by its bank and although its performance improved last year, SBS had trouble paying interest on debts of £2.7m incurred during the IT recession.

The firm’s US subsidiary, SBS Group Inc., had continued to trade separately from other divisions.