Behind the numbers: brake point

Damian Wild, AccountancyAge

Recent financial results from recruitment consultants, accountancy firms and
others in our space (that, I believe, is how marketeers refer to industries and
sectors these days) show mounting evidence of a slowdown very much under way.

Some readers have already taken me to task for taking such a pessimistic

Last month, I blogged on Michael Page’s results. The recruiter had unveiled a
15% increase in UK turnover and a 21% rise in gross profits. But while the gross
profit from marketing, sales and retail rose by 21%, and from other disciplines
by 35%, it increased by only 14% from the finance and accounting stream. This
otherwise impressive rise was less than the rate of growth throughout the rest
of the business. This, I suggested, meant that the accountancy business was
acting as a brake on the firm’s growth.

I was duly taken to task. ‘Hmmm, 14% growth looks pretty impressive to me,’
said one visitor to my blog. ‘Any double-digit increase hardly points to a
slowdown. Also, when one considers that the bulk of Michael Page’s global
revenues come from accounting and finance, is it surprising that other parts of
the business are growing slightly faster?’

He – or she – was, of course, right. But I stand by my interpretation that
the results suggest a cooling off in the accountancy market, a view since
reinforced by the publication of other recruiters’ results, not least Hays,
which reported impressive results (17% in both fees and earnings per share) but
sounded twin warnings. The demand for accountants in the public sector, which
has been buoyant in recent years, is slowing, Hays suggested, as is the use of
temp and contract accountants.

Another point made by the critic of my Michael Page analysis also had some
validity: ‘It is always that little bit easier to put up some impressive
percentage growth numbers when you are starting from a smaller base.’

And this is a favourite claim of PricewaterhouseCoopers, the biggest of the
Big Four. But the 6% fee growth that PwC reported earlier this month seemed
decidedly lacklustre in the light of recent gains and Deloitte’s 15% rise in fee
income, reported a week earlier.

So several signs of a slowdown then. And before anyone suggests I’m being too
pessimistic, I’ve only pointed to a slowdown. No one – myself included – sees
the wheels coming off this particular juggernaut any time soon.

Damian Wild blogs at

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