Recruiter Randstad says companies still hesitant to hire

By Olivier Sorgho

(Reuters) -Randstad, the world’s biggest staffing firm, on Tuesday joined peers in the recruitment sector in flagging a soft jobs market, even as it said cost cuts helped it beat profit expectations in the third quarter.

Recruitment firms – whose performance reflects the health of the labour market and consequently the economy – have been flagging companies’ reluctance to hire and workers being wary of the risk of switching jobs.

“Unemployment has been I would say creeping up by 10 to 20 basis points in some countries. The number of vacancies has come down,” Sander van‘t Noordende, chief executive of the Dutch-based group, said in an interview, pointing to lower job postings.

His comments echo evidence of weaker labour market trends that has already emerged from the sector. Britain’s Recruitment and Employment Confederation (REC) for instance said on Oct. 11 that employers had cut their job vacancies for the first time in more than 2-1/2 years in September.

Randstad’s underlying earnings before interest, tax and amortisation (EBITA) fell 17% year-on-year to 273 million euros ($291.5 million), but beat the 258 million expected by analysts in a company-provided poll.

The profit beat was driven by management of operating expenses and pricing initiatives, finance chief Jorge Vazquez said on a call.

The group’s revenue in the quarter still fell 7% to 6.26 billion euros, which was “significantly more down than expected,” according to KBC analysts.

Third-quarter revenue trends continued in October, Randstad said, raising some concerns among analysts about the rest of the year.

“We believe the weakening revenue trend adds to the downside risk although we do acknowledge the excellent cost management,” ING analysts said in a note.

Sectors which showed some resilience were automotive, in the Netherlands, France and Germany, as well as public health and education. “The challenges I would say are pretty much everywhere else,” the CEO said.

On companies asking staff to return to offices, van‘t Noordende said research showed that people working in a hybrid model were roughly equally productive as those working fully from the office.

The shares were down 0.2% at 47.70 euros by 0844 GMT after falling as low as 46.06 euros, their lowest in nearly five months.

($1 = 0.9366 euros)