Business confidence among recruitment executives has improved slightly from the record lows of recent months, but the industry is still "shedding staff and not replacing them", according to the latest RCSA member survey.
The poll of 179 Australian and New Zealand recruitment company owners and managers, conducted in early May, found that nearly half (49.8%) believed business conditions would improve in the next three months, up 4 percentage points.
When asked how much they expected business to change in the September quarter, recruiters predicted an average 1% rise in business volumes - compared to a predicted fall of 0.7% in the previous survey.
Despite the improvement in confidence, the survey showed that recruitment firms had downsized their workforces by an average of 33%. Staff turnover had also climbed to a record high of 55%.
"Members are shedding staff and not replacing them," the survey report said.
The survey also showed that permanent placements now made up just 4% of the industry's total placement volume, down 5 percentage points, while temp and on-hire had increased by 5pp to 96%.
In revenue terms this equated to a 2 percentage point rise in revenue generated by temp placements to 52% of total revenue, while perm revenue continued to fall, down another 2pp to 37% of revenue.
Recruiters ramping up client contact
On average, according to the survey, recruitment companies reported interacting with an average of 331 clients in the past three months, an increase of 40%.
"Obviously, the marketing effort of members has increased as a response to the current economic climate," the report said.
The report also found that 38% of recruiters had now introduced new service offerings, such as coaching or talent management consulting, to supplement their traditional recruitment and on-hire revenues.
Some three quarters of companies had also modified their existing recruitment services to adapt to lower levels of demand, the survey found.
Signs of stabilisation: Mills
The most pressing concern for survey respondents was the state of the economy, unchanged from the previous survey. This was followed closely by lack of demand, maintaining profitability, and industry price undercutting.
RCSA chief executive Julie Mills said the survey showed there were signs that the labour market was "stabilising after some very volatile months".
"We would expect that businesses will be slow to return to more aggressive and long-term recruitment strategies in light of continuing economic uncertainty.
"However, the results from this quarter present a more optimistic outlook than we have seen in the past six months."