There is still underlying growth in the recruitment sector but the flattening of the growth curve implies that the industry may have peaked for the time being, according to BDO’s review of the latest outputs from Recruitment Industry Benchmarking (RIB).

The run-up to Christmas is an interesting time for recruiters and for many it is the busiest time of the year as they provide seasonal workers to meet increased demand. This year, however, there is an element of caution in the air. Economic uncertainty, particularly from the eurozone, is dampening consumer spend and rumours of a double dip are reigniting. Additionally, this year recruiters may get an unexpected and undesired Christmas present in the form of a claim from a worker under the newly introduced Agency Workers Regulations (AWR).

The run up to Christmas is an interesting time for recruiters and for many it is the busiest time of the year as they provide seasonal workers to meet increased demand

Looking at the performance of RIB members against this backdrop, therefore, provides encouraging news. Revenues continue to remain ahead of 2010 with the first eight months of 2011 being on average 8.5% higher than in 2010. Putting this into context, performance during 2010 was 9.2% up on 2009, the year in which the industry retreated by over 25%. This does mean that levels are still some way off the peak but this is still a significantly good performance against the economic backdrop and underlines the importance the industry has in the operations of UK plc.

It should be noted that the rate of growth in more recent months has slowed and flattened to around 5%. This correlates with the cautious note in the economy and may be an indication that we have reached a peak in the demand for recruitment services, for the time being at least. It should also be put into context that this slowdown was over the summer months and this can generally be a quieter time for recruiters.

A more detailed review of revenue across temporary and permanent sales shows that both sides of the industry are performing well, and what may come as a surprise, that permanent revenues are growing ahead of temporary. Permanent revenues in 2011 are 20% up on the same period in 2010. This part of the market was however hit hardest during 2009 where some months were only 40% of the level achieved in 2008. The more surprising trend from permanent placements is that the average placement salary has been growing during this time. Since March 2011, the average placement salary has remained over £28,000, a significant increase over that experienced during the last two years.

As listed companies have announced their latest results to June over the past month, they all look at the UK market with an element of caution. The UK labour market continues to show fragility and BDO’s Employment Index dropped further in September to 95.9, down from 97.2 in August. This is the fourth consecutive month of decreases in the Index, highlighting a worsening trend in employment conditions with the Index now at its lowest point since January.

• Christopher Clark, corporate finance partner, bdo
• Crawfurd Walker, director, recruitment industry benchmarking