Recruitment agency sales peak in 2018
Recruitment agency sales peak: Perm and temp/contract sales reach a simultaneous high
Australian recruitment agencies have smashed sales records in the past 12 months, with both the permanent and temp/contract income streams recording all-time highs.
When it comes to recruitment agency sales, it’s rare to see results from both income streams – permanent and temp/contract – peak at the same time. However, that’s exactly what happened in the 12 months between October 2017 and September 2018. According to Staffing Industry Metrics, who analysed data from 102 Australian recruitment agencies, median sales reached record highs across the board in this period.
Temp/contract sales soar consistently throughout 2018
For the first time ever, median monthly temp/contract sales broke through the elusive $900,000 barrier, not once but twice in the 12-month period, registering a very healthy 12% growth on the prior 12 months. Of this 12% median growth, recruitment agencies in the 75th percentile achieved 27% growth, while the larger players at the 90% percentile achieved 19% growth.
Perm sales skyrocket
Perm results were even more impressive, with median monthly sales exceeding $100,000 in 13 of 16 months since June 2017. Considering the $100,000 sales threshold had been unbreakable since 2002, this is an outstanding result. Results for October are still pending, but early indicators suggest that median perm sales will break through the $150,000 barrier for the very first time. Overall, median perm sales increased by a staggering 62% on the previous year. Recruitment agencies in the 75th percentile reported perm sales growth of 39%, compared to 15% growth for recruitment agencies at the 90th percentile.
The market is strong, but for how long?
Recruitment agency sales have been up and down since the global financial crisis (GFC) in 2007-08. The graph below (which tracks recruitment agency sales over the past 15 years) shows the market has bounced back and is now stronger than ever. The question is, how much longer will it last?
With several big factors set to come into play, business confidence (and, in turn, permanent sales) could be negatively impacted in 2019.
The first factor is Brexit, which is scheduled to pass towards the end of the first quarter. As many Australian businesses have parent companies in Europe, the impacts of Brexit are expected to be felt by local recruitment agencies – especially when ‘no hiring’ mandates are passed down the line due to poor confidence in Europe.
The second factor is the Federal election, likely to occur around May/June 2019, and will naturally create a degree of uncertainty within hiring companies. This coincides with the end of financial year, when many businesses have already exhausted their staffing budgets and permanent hiring slows down. Plus, if the Labor party prevails, the temp/contract market may be further threatened by a host of enquiries and changes to the EBA and Awards structures.
It will be interesting to see how the market shifts as these critical events draw closer. Watch this space for more insights and keep your agency ahead of the curve. Until then, enjoy the highs – and make hay while the sun still shines.
How does your recruitment agency measure up? Read our previous post about first half profits to see how you’re tracking.