The UK recruitment industry is now worth £24.5bn after bouncing back from the economic slump, according to new research.

The Recruitment and Employment Confederation (REC) said in its annual recruitment industry report that turnover had increased by 7% in the 2003-4 financial year.

Accelerating demand for temps and an increase in permanent recruitment volumes were the main drivers behind growth.

The industry provided 1.5m temps and placed more than 560,000 people in permanent jobs, according to the research produced in association with accountancy firm PricewaterhouseCoopers.

The report also highlighted the opportunities and threats that recruitment companies believed would affect them in the future.

Of those surveyed, 40% believe that the greatest opportunity for growth is through preferred supplier agreements, but three-fifths say that such agreements currently account for less than 20% of business.

Recruiters identified skills shortages and legislative changes, particularly increased rights for temps, and increased competition as the main threats to business.

The number of permanent placements per consultant rose from 18.1 in 2002-3 to 19.7 in 2003-4.

The survey questionnaire was sent to 10,481 organisations and 416 replies were received. It asked respondents to indicate the amount of revenue in temporary or permanent business respectively, as well as the number of consultants working in each market sector.

The survey included a question about revenue for previous and current years, as well as predictions for the next year. These figures allowed researchers to calculate the recruitment industry’s growth.

REC managing director Gareth Osborne said: “These positive figures reflect the improved economic conditions since the last survey and are further evidence of the key contribution that the recruitment industry makes to the UK economy and labour market.”