Home >  Blog >  August 2023 Market update

August 2023 Market update

Posted by Nigel Harse FRCSA on 20 September 2023
August 2023 Market update

September 2023 - Staffing Industry Metrics Market Update

Results from 87 staffing & recruitment firms in Australia for the first 8 months of 2023 bring some significant trends and shifts that demand our attention.

1. Impressive Growth in Temporary and Contract Sales

One of the most striking facts is the continued and substantial 32% growth in temporary and contract sales when compared to 2022. This surge reflects the dynamic nature of the Australian labour market, where businesses are increasingly turning to flexible staffing solutions to meet their evolving needs.

2. Plateauing Permanent Sales

On the flip side, while permanent sales also grew by 20% compared to 2022, it's crucial to note that this growth has plateaued during the first two quarters of 2023 with the market showing signs of further slowdown.

3. Margin Compression in Temp and Contract Gross Profit

Despite the booming demand for temporary and contract staffing, there's been a surprising 5% decline in gross profit as a percentage of sales compared to 2022. This anomaly raises concerns about margin compression, as 78% of participants experience a softening in margins. Finding ways to optimize operational efficiency without compromising quality is imperative in these high-demand times.

4. Decline in Productivity

Productivity, measured as gross profit produced per income producer, has declined by an alarming 17% compared to 2022. This decline from $262k to $217k over 7 months is a cause for concern. Leaders should focus on strategies to boost productivity, potentially through technology adoption, training, or process optimization.

5. Escalating Operating Expenditure

Operating expenditure has surged by a significant 16% compared to 2022. This increase well above inflation levels is putting additional pressure on profit margins. Controlling costs without compromising quality is crucial for maintaining financial health.

6. EBIT Decline

Perhaps the most alarming trend is the 22% decline in profit (EBIT) compared to 2022. Increased operational costs, falling productivity, and margin compression are all contributing factors. To reverse this trend, it is essential to implement a comprehensive cost control strategy and explore innovative ways to drive revenue growth.

In conclusion, the sector has experienced remarkable growth however, this growth is accompanied by concerning trends, including margin compression, declining productivity, escalating operating expenditure, and declining profits.

As Owners, CEOs, CFOs, and Finance Directors, it's crucial to address these challenges head-on by implementing strategic measures to optimize efficiency, control costs, and diversify service offerings. The ability to adapt swiftly in this ever-changing landscape will be the key to long-term success.

Staffing Industry Metrics participants get to see 16 VITAL TRENDS as they are happening, how do you manage to manage the right trends?

Nigel Harse FRCSAAuthor:Nigel Harse FRCSA
About: Highly regarded and widely sought after for his knowledge, unwavering passion and innovation, Nigel is a 40-year veteran of the recruitment industry.
Connect via:TwitterLinkedIn
Tags:Business ProfitabilityPerm Sales in AustraliaPerformance Metrics

Need a a quick sanity check as we ride the roller coaster of changing demand?

Discreetly see how your business performance stacks up through these fast & challenging times  

Take me there!

Bookmark SiteTell a FriendPrint