Service sector recruitment faces gloomy six months

The service boom that has been driving the economy could be at an end, results for this quarter's Recruitment Confidence Index suggest.

The index, which predicts recruitment activity over the next six months, has plummeted among service sector employers and now stands at 108 compared to 160 three months ago.

Predictions for staff turnover in the service industries also suggest a slump in recruitment activity. Last summer employers forecast a hike in staff turnover but the past six months have seen predictions for turnover drop to negative figures. [net percentage of -7]

Service sector employers are also increasingly gloomy about business conditions and business confidence in general is down. A net figure of 40 per cent of service sector employers are optimistic about the future compared with 54 per cent in the autumn.

The RCI has been produced every quarter for the past three years by Cranfield School of Management and the Daily Telegraph.

Commenting on this quarter's findings Shaun Tyson, Professor of Human Resources at Cranfield School of Management said: Different industries within the service sector are suffering from different problems.

A levelling of house price rises could have helped cause the very average Christmas that retailers experienced. But financial services are primarily suffering from the fall in the stock market and the lack of profitability among firms.

One positive note in this quarter's figures is that service sector employers are expecting the number of managerial/professional staff to rise over the next six months. This is coupled with a prediction that customer services and sales managers will be in demand.

It could be that firms are looking for people who can leverage existing client and customer relationships, Professor Tyson says.

Manufacturers are surprisingly optimistic about the future, compared with the service sector. The index shows only a four-point dip in predicted levels of recruitment among manufactures, and well over half remain confident about the future. In addition there has been a sharp rise in the net percentage of manufacturers expecting business conditions to improve over the next six months. This has gone up to 33 per cent this quarter from 5 per cent three months ago.

Daily Telegraph recruitment sales manager Nick Hill said: RCI results for manufacturing have been borne out by the Daily Telegraph's figures for quarter four of 2002 and the first month of 2003 which appears to show that the market is flattening.

We've entered the New Year on an encouraging note. If manufacturing recruitment can stay flat for the next six months, then I think we've weathered the worst. However, I expect it to remain flat for a further six months after that.