The recruitment industry is high on confidence and expecting a 2005 that will see an increase in business and margins, as well as possible stock market flotations.

Analysts are bullish after dazzling sets of financial results from the top listed staffing companies, and predict more recruiters will float on the stock market this year.

Richard Jones, an equity analyst at Brewin Dolphin Securities, said: “I would certainly expect to see some activity. You always get a rush of this sort of thing in good markets.”

Paul Jones, a director of the investment bank and stockbroker Numis, said: “People think we are looking towards improvement this year and we are heading towards rate rises. There is a shortage of certain services, in particular newly qualified accountants.”

Brewin Dolphin’s Jones predicted the shortage of accountants could continue for two to three years. Accountancy companies had only just begun to hire in large volumes again following the collapse of Enron, he added.

This, and the fact that it takes three years to train an accountant, mean the shortages could continue for some time – and recruitment firms will be able to benefit from the candidate-driven market and charge larger margins.

Michael Page and Robert Walters, two firms often seen as a benchmark for the industry, have produced full-year figures showing increased profits. Walters’ profits more than doubled to £7.2m, while Page’s profits hit the £40m mark on a turnover of £372.6m.

Hays has seen its decision to restructure as a recruitment-only business vindicated with a strong financial performance. Another recruitment company listed on the stock exchange, PSD, saw pre-tax profits increase from around breakeven point to £2.9m.

One of the most recently listed recruitment companies, Staffline, announced maiden full-year results that were ahead of expectations.

It cut its losses before tax by 76% to £134,000 and increased turnover by 22.8% to £48.9m. It expects to declare an interim dividend at the time of its next half-year results.