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?
|Tags:Business ProfitabilityPerm Sales in AustraliaPerformance Metrics|