The recruitment industry shrank by an estimated 7% to £26.22bn in 2008, and contraction is set to continue in 2009, according to a new report.

MBD Commercial Due Diligence predicts that after taking into account an expected recovery beginning in 2010,  the industry will contract by 3% between 2009 and 2013.

The report says this reflects “the slow level of growth that is likely to occur during the recovery period once the market stabilises.”

Temporary recruitment will be hit particularly hard, with the market shrinking by 12% to £20.47bn in 2009. However post-downturn, growth in the temporary market “is expected to be sustained”, with a boost expected from The 2012 London Olympics.

In its forecast for permanent recruitment, the report says; “The value of the permanent placements sector is forecasted to contract by a significant 10% in 2009 as businesses are unable or unwilling to expand employee numbers due to concerns about future levels of prosperity.

“Between 2008 and 2013 the sector is forecast to contract by 1% cumulatively, reflecting the severity of the downturn and the slow speed of recovery.”

Hexagon’s chief executive, Jonathan Wright, told Recruiter; “Hopefully, shareholders and analysts believe that we have taken speedy and proportionate action to ensure the long-term future of the business.”

In a broker’s note Brewin Dolphin says it is retaining its buy recommendation.  “We believe the board has taken appropriate and timely action, and given the economic backdrop, that the company is making progress, and note that to date the bank has been very supportive.”