Sluggish hiring, particularly in Germany's automotive sector, prompted recruiter Hays to warn today that its annual profit would fall more than expected, sending its shares and those of European rivals lower.
Sweeping US tariffs under President Donald Trump are projected to slow Germany's growth by 0.1 percentage point in 2025 and 0.3 point in 2026, and result in the loss of 90,000 jobs within a year.
There was broad weakness in permanent hiring globally, with low confidence among employers and job seekers due to economic uncertainty, Hays said, but temporary hiring and contracting was more resilient.
However, Hays said that in Germany, which made up 65% of its operating profit in 2024, temporary hiring was also impacted as it had greater exposure to the autos sector.
Hays' shares fell as much as 20% to a 13-year low today, and the profit warning dragged down shares of rival recruiters across Europe, with PageGroup down about 5% while Randstand fell 4%.
Germany's car sector, which relies heavily on exports to the American market, had already been in decline due to weak European demand and foreign competition, even as trade talks with the US continue.
The recruiter projected operating profit of around £45m for the year ending June, slumping more than 57% from last year and well below market expectations of £56.4m, according to a company-compiled poll.
"This is not wholly unsurprising given the enhanced macro-political uncertainty, and the fact that new job inflow is reducing on top of the previously announced extension in the time to hire, then it is clear that a recovery is unlikely any time soon," RBC Capital Markets analysts said in a note.
Like-for-like net fees in Germany, which made up 65% of Hays' operating profit in 2024, is expected to fall by 5% in the current fiscal year.
The firm also expects group like-for-like net fees to fall by 9% in the fourth quarter, with market challenges likely to persist into 2026.
