London's jobs market bouncing back

LONDON'S top financial recruitment firms were today hailing a return to the good old days of fat fees for placing candidates.

Hays, the FTSE 100 stock which has reinvented itself from a sprawling logistics group into a specialist recruitment house, said its net fee income soared by 17% on a like-for-like basis over the last two months up from 11% over the previous year.

Denis Waxman, the newly-promoted chief executive of the group, said: 'We are firing on all cylinders.

'The cracks in the dam are appearing and water is starting to come through. Over the last few years there have been a lot of professional people out there frustrated and not able to move. That is beginning to change.

'A lot of people in the middle and junior management positions we specialise in need to move for the CVs. They want to see shorter timescales for their next moves and want more management responsibility more quickly.'

Waxman said the real boom area has been chartered accountants, where serious shortages have emerged after the major accountancy training firms culled their graduate intakes around the turn of the decade.

Hays reported a 17% rise in recruitment profits to £133m in the 12 months to the end of June as it announced a 3p full-year dividend, down from the 5.2p paid when it was a larger business.

The strong performance was echoed by international recruitment giant Adecco and by financial specialist Robert Walters.

Adecco, hit by accounting troubles earlier this year, said second quarter revenues are up 6% and operating profits up 16% at €114m (£77 million).

Walters reported a 21% rise in net fee income over the last eight months and interim profits for the first half of the year up 52% at £2.8m.

The group's chief executive Robert Walters, who is holding the interim dividend at 1.05p, sounded a note of caution, however.

'We are seeing encouraging growth but much of what we do depends on confidence in the market. The feelgood factor is still lacking,' he said.

Not all recruitment firms are enjoying the recovery.

Reed Health, which specialises in finding nurses, teachers and social workers, today warned profits will come in 'materially below' market expectations.

The firm, which last year went through a controversial shake up after the intervention of majority shareholder Alec Reed, said it had been hit by having to make compliance checks on nurses by the implementation of new IT systems and larger than expected costs of expanding its network.

Hays is to finish its massive clear out of businesses by demerging its business-to-business mail operations as a separately-listed stock which will float with a market capitalisation of around £175m and debt of £75m.