SThree shares soar as US contractor demand slows global hiring slump
Updated:
SThree shares jumped on Tuesday as improved contractual hiring in the US helped slow a sharp fall in the recruiter's global fee income.
The group, which focuses on recruitment in STEM industries, reported that its net fees fell by 14 per cent to £159.1million in the six months ending May.
Difficult trading conditions affected both contract and permanent hiring, as well as the firm's three largest markets of Germany, the Netherlands, and the UK.
The result chimes with the performance of recruitment rivals Hays and Robert Walters as the industry suffers the impact of a global hiring slowdown.
President Donald Trump's tariffs, including a 10 per cent baseline levy on most US goods imports, have also exacerbated global economic uncertainty and weighed on hiring.
But SThree reported a sequential improvement in its contract segment in the second quarter compared with the first, driven by strong demand for engineering roles in the US.
Not wanted: British companies are increasingly holding back on hiring, leading to the number of UK job vacancies decreasing by 63,000 to 736,000 over the three months to May
British companies, meanwhile, are increasingly holding back on hiring, leading to the number of UK job vacancies decreasing by 63,000 to 736,000 over the three months to May.
The decline also coincided with minimum wage and National Insurance hikes that Chancellor Rachel Reeves originally announced in her Autumn Budget.
From early April, the National Living Wage went up by 6.7 per cent to £12.21 per hour, and employers' NI contributions rose from 13.8 per cent on annual salaries above £9,100 to 15 per cent on wages exceeding £5,000.
Consequently, SThree's first-half net fees in the UK plummeted by 28 per cent to £14.2million.
Yet shares in the London-based company climbed more than 9 per cent in early trading before retreating to be 6.9 per cent higher at around 11:15am, although they were still the FTSE 250 Index's best performer.
The group's net fees shrank by 14 per cent to £47million in Germany due to weaker demand for technology skills, and by 22 per cent to £28.6million in the Netherlands amidst reduced availability of engineering and technology roles.
Following a record prior-year result, SThree's net fees from engineering were 9 per cent lower, while in the firm's life sciences and technology segments, they were 15 per cent and 18 per cent down, respectively.
However, SThree said it still expects to make around £25million in pre-tax profits this financial year.
Timo Lehne, chief executive of SThree, remarked: 'Whilst market conditions remain challenging, the group delivered a stable first half performance, with a modest sequential improvement quarter-on-quarter.
'As we look forward to an improvement in market conditions, we remain confident in our belief that global megatrends, such as technological advancements and demographic shifts, will continue to shape the future world of work.'
Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.
Compare the best investing account for you
This İs Money
