Faced with skills shortages and economic changes, recruiters must identify new areas of specific demand and respond faster than their competitors, says economist Sue Dodd.

Dodd, director of Agile Intelligence, made her remarks at a London seminar on the economic outlook for recruitment.

While the UK is currently experiencing low unemployment and low inflation, the economic future is less certain, Dodd said. She pointed to four quarters of decline in gross domestic product, a drop in the annual growth rate, depressed retail sales and a fading “consumer feel-good factor” in the middle of a pull-back in housing prices and rising debt repayments.

She added that public sector expansion – which had previously driven GDP – appears to have reached its limits.

Other key points in Dodd’s presentation and subsequent question-and-answer session included:

* To date, 2005 shows a 2.2% decline in recruitment industry turnover.

* Overall temporary worker volumes are in decline after peaking in 1997, but agency penetration seems to be increasing.

*Some companies include their payroll in their turnover figures.

“If they put the fees only, we would be looking at a very different industry,” Dodd said.

* The top 16 recruitment companies, representing about 25% of industry turnover, lost about a quarter of gross margin percentage between 1995 and 2004.

* Overall recruitment industry sales revenues during this period almost tripled, with a compound average gain of 12.6% per annum.

The event was sponsored by recruitment-to-recruitment agency Perriam & Everett and held at the offices of law firm Decherts.