Successful investing is all about spotting opportunities. Take the UK staffing industry, which only last spring was basking in double digit NFI (net fee income) growth on the back of buoyant conditions.
12 months on and recent trading updates from the likes of Randstad, Adecco, Hays, Robert Walters and Sthree, paint a far more “challenging” picture (see below) after a “noticeable” Q4’15 slowdown, especially in permanent placements. Michael Page adding on Tuesday that Q1’16 results have been further “impacted by the EU Referendum”.
This ‘air-pocket’ in demand has led to sharp contraction in valuations, with sector EV/EBITA multiples tumbling 25% on average over the past 6 months from 12.9x to 9.7x.
The good news for prospective investors, though, is that this type of indiscriminate sell-off presents buying opportunities.
Indeed, with interest rates anchored at 0.5%, real wages rising and unemployment (see next table) low, then from a macro standpoint – even ahead of the BREXIT vote on 23 June – the UK labour market certainly does not appear to be falling off a cliff.