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Hays quarterly growth stumbles as German economy cools

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By Yadarisa Shabong and Noor Zainab Hussain

(Reuters) – Recruiter Hays posted quarterly net fee growth below market expectations on Tuesday, as its biggest market Germany was hit by slowing growth and a trade spat between Beijing and Washington.

The staffing company had in February flagged a lower level of contractor extensions in Germany, reducing its overall growth rate, as Europe’s largest economy reported its weakest growth rate in five years.

Hays, which is focused on white collar jobs, reported a 6 percent rise in net fees for the third quarter through March, against 10 percent a year earlier and a consensus expectation of 7 percent, according to Liberum analysts.

Shares in the company, which had hit a five-month high of 163.5 pence on Monday, were down 3.9 percent at 156.7p by 0807 GMT, making them the second biggest losers on London’s midcap index.

Hays, which places workers in areas such as finance and construction, said net fees from Germany rose 5 percent in the three months ended March.

“We’re doing all the appropriate things to continue to drive profitability in Germany,” Chief Financial Officer Paul Venables told Reuters. “We are just starting to see in the manufacturing and automotive space slightly less investments from our clients.”

An unexpected drop in production of German goods in January was driven by plunging car output, leading an industry body to cut its 2019 growth forecast and adding to signs that trade tensions and unease about Britain’s looming exit from the Europe Union are weighing on the country.

“A year ago, Europe was a very strong economic backdrop … since then we’ve had the tariff war between U.S. and China which doesn’t help Germany,” Venables said.

He said 50 percent of German GDP is export related, “so (it) shouldn’t be too much surprise that we’ve seen slightly less growth in the quarter.”

Graphic: PageGroup leads the pack of UK recruiters (

Hays’ performance in Australia and New Zealand also faltered and Venables said the recruiter had seen tightening in construction and property hiring.

Analysts had been concerned by the recruiter’s performance in Australia after data from the country’s online job portal SEEK showed its job ads fell 3.6 percent in February compared with a 0.6 percent rise in January

In its home market Hays saw a rise in net fees of 3 percent despite Brexit uncertainties, joining rival Robert Walters which on Monday said confidence among businesses in Britain was reasonable.

(Reporting by Yadarisa Shabong and Noor Zainab Hussain in Bengaluru; Editing by Bernard Orr and David Holmes)

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