Recruitment firm Michael Page International has warned that the UK banking sector remains 'particularly depressed' and sees no end to the hiring freeze at many financial firms.
Profits from UK banking recruitment plunged 50% year-on-year between January and March, dragging the firm's overall UK profits down 3.7% to £30.6m.
Chief executive Steve Ingham said: "Clearly there are still issues around the euro zone sovereign debt and these things are influencing our business, but ... I don't think things are getting worse. Our conclusion on March was that banking remains difficult [and] certain geographies remain more challenging than others."
He pointed to Italy, Spain and Britain. European stock markets were rocked by a wave of panic selling on Tuesday amid fresh fears over Spain and Italy, which saw borrowing costs jump.
Michael Page, which is seen as a bellwether for the wider economy, described the UK market as "very challenging and highly competitive" but said this was offset by stronger performances in other countries, including Germany and France, which grew by 36% and 10% respectively. Group profits climbed 6.9% to £136m in the first quarter.
Shares in the company dived 6% in the morning following a recent strong run for the FTSE 250 index stock, and finished the day 3.6% lower at 437.8p.
In Asia, where the firm employs more than 1,000 people, profits climbed 23% to £26.3m. However, like UK and North America, the weakness in banking reduced growth rates, particularly in Tokyo, Hong Kong and Singapore. Amid the turbulence in financial markets over recent months, profits from banking recruitment worldwide dropped 12% and the sector now accounts for 8% of the firm's trading (UK banking makes up 1%). Recruitment in engineering, construction, property, supply chain and business procurement, accounts for nearly a fifth of its business.
Investec Securities analyst Robert Morton switched his recommendation on the stock to 'hold' from 'buy,' saying: "The recruitment sector will clearly face some choppy waters in the very short term, but we still believe that the underlying structural recovery/growth story for the sector remains intact."
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