It’s been a long, cold, wet and dark winter. Harsh economic winds have been firmly in our faces, carrying away any confidence that there could ever be another summer breeze.
All investment needs this confidence; to deploy capital, to commit time and resources, to make hiring decisions, and to fully commit to making a career move. Picking the right time to invest in any of these is critical. We know that there is plenty of dry powder becoming impatient in its need for deployment. We also know that the ‘great resignation’ didn’t fully materialise and as much as there are mountains of capital, there are also deep pools of people impatiently waiting to make their move. On both counts, should we follow Blackstone’s latest missive and make the commitment
‘before the all clear signs come out’?
Shifting Sentiment
Whilst we search for the emergence of these ‘all clear signs’ it’s important to recognise the ingredients that begin to shift sentiment. Increased Interest Rates, low consumer confidence and geopolitical turmoil have all weighed heavily on M&A activity, which dropped c.50% in Q2 last year to 2009 levels. Conversely, fund raising in 2023 surpassed 2022 levels, albeit skewed towards the largest funds.
As we go further into 2024, growing confidence will be supported through the expectation of lowering interest rates, falling inflation, continued economic recovery and the prospect of some of our key geopolitical issues reaching a conclusion. These are the ingredients that should combine to help vendors and acquirers find the balance point that will unleash the ‘
wall of money’ and fuel broader activity in the market.
Shifting People
In the early parts of the year, we have already begun to see the effects of this initial growth in confidence. Market stagnation did not fuel a spike in unemployment levels, but it certainly led to a slowdown in the recruitment merry-go-round. If the Great Resignation didn’t go off with a bang as expected post covid, over the past year it has been stoked by uninspiring bonus rounds, supressed real term pay increases and business inertia.
Across our networks, vacancy levels are still low, and whilst the unemployment rate has remained uncharacteristically resilient at 4%, the latest report from KPMG suggest that the
labour market and wage increases are more broadly starting to cool. However passive candidate activity has grown significantly. It is rare that we introduce people to clients who are not previously known to us, so an upgrade to ‘passive status’ is a subtle note with a quiet whisper rather than a necessary freshly moderated CV. This trend is clear, and the merry-go-round is poised to begin turning, with pace, at the earliest opportunity.
Conclusion
The recruitment landscape is always a reflection of the wider market - when investors are cautious, employers focus on cost and job seekers are cynical about opportunities with progression. Time weighs heavily on all, in the same way that investors have been growing impatient, waiting for the right time to strike, many people are biding their time to make that next career move. The rules for all are the same, get ahead of the market and be prepared for when that opportunity knocks; to wait for the all clear signs is to wait too long.
