IT doesn’t take a recruitment expert to work out that the market for City jobs is on the wane.

No wonder staffing firms are out of favour with investors. Just like advertising agencies, they are a good early indicator of corporate confidence – companies that can see a downturn coming don’t take on new employees.

Ian Jermin at Landsbanki said that recruitment-sector shares tumbled 80% during the last downturn in 2001-3. This time round, the sector has fallen almost 60% since last July. It has rallied a little of late, but this could be a dead-cat bounce.

The main players are showing signs of a slowdown. However, two of the biggest recruiters, Michael Page International and Hays, still reported 24% and 17% growth in fee income respectively in the last quarter.

The British economy may be slowing and recruitment in banking and construction falling, but the figures of the recruitment agencies are buoyed by their overseas divisions.

Compared with global advertising groups such as WPP, recruiters have been slow to set up international networks. They are rectifying that now.

At Michael Page, 66% of its profits come from outside Britain. For Hays, which is larger, with a market value of £1.7 billion, the figure is 42%.

In Britain, Hays had growth of 5%, against 11% in the preceding quarter, but its Asia Pacific business steamed ahead at 40%, albeit from a low base.

Part of the opportunity is cultural. Anglo-Saxon professional promiscuity has been exported around the globe. Japan’s job-for-life salarymen have fast fallen into the minority.

It is also worth remembering that Hays has a natural hedge against uncertainty in its temps business, which is showing no reduction in demand so far.

Alistair Cox, Hays’s new chief executive, will give some clues to his vision for the company at Thursday’s investor day.

The former boss of Xansa, the outsourcing group that took BBC and NHS accounting work to India, wants to inject some of his technological know-how into the company. For example, most temps’ timesheets are still recorded on paper. Putting the whole process online is an easy win.

Hays shares trade on 8.6 times 2008 forecast earnings, a premium to Michael Page’s 7.9 times. Even in a downturn, there could be value here.

Debenhams

ALL general retailers are out of favour at the moment, but Debenhams is particularly unloved – its share price has fallen by about two-thirds since the company was floated in May 2006.

When Debenhams reports interim figures this week, look for some signs that the company is prepared to show some strategic consistency – something it has lacked until now. Is it – as it claims – really trying to become posher in the merchandise it offers? And if so, how does that square with the never-ending promotions it runs? And is it really prepared to spend the necessary money to press ahead with better-quality store refits? It says these are effective; they really do lift sales. But in that case, why has Debenhams been talking about slowing the pace of refits this year?

The rationale is hard to divine. No wonder the shares are so cheap.

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