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Recruiter Hays sees UK labour market improving

By Li-mei Hoang

LONDON (Reuters) - British companies are taking on more permanent staff, recruitment firm Hays said on Thursday, in a sign the country's economic recovery is gathering pace.

Hays, which places workers in areas such as finance, construction and IT, said net fees in Britain rose 8 percent on a like-for-like basis in the three months ended September 30, the first quarter of its financial year.

That compared with a 1 percent decline in the year ended June 30, and included a 9 percent rise in fees from permanent jobs and an 8 percent increase from temporary posts.

"The important part here is that there was a big pick up in the permanent business because if you go back across all of our other quarters for the last three years, temporary has outperformed permanent by between 5 to 10 percent," finance chief Paul Venables told Reuters.

Britain is Hays' single largest market, accounting for about 30 percent of net fees. Its comments add to signs the country's economic recovery is starting to build after a protracted period of weakness since the 2008 global financial crisis.

Earlier this week, data showed hiring for permanent jobs in Britain gained pace last month and salaries rose at their fastest in six years, while the International Monetary Fund lifted its forecast for UK growth.

Hays said it also increased consultant numbers in Britain in the three month period to 2,034 from 1,929.

"We hired more people in the UK business than anywhere else in the world, which is the first time I've been able to say that for six years," Venables said in a telephone interview.

Hays shares, which have risen about 40 percent this year amid mounting signs of economic recovery, were up 1.6 percent to 117.5 pence at 1000 GMT.

The group said total net fees rose 2 percent on a like-for-like basis, with growth across Europe and Asia offsetting a decline in Australia. That compared with a 1 percent decline in group net fees in the year ended June 30.

"The tone continues to become more optimistic," Jefferies analysts said. "Market conditions have evolved from 'fragile' six months ago, to 'mixed' in July, to 'improving' currently and trading conditions have 'improved in several markets'."

Like-for-like net fees in Hays' "continental Europe and the rest of the world" region, which accounts for 46 percent of the total, were up 6 percent.

That broadly chimes with official data, which showed flat unemployment in the euro zone in August after a decline in July for the first time in two years.

"The driver is that there really hasn't been any bad economic news now for a good six months and when that happens, our clients will see that in their own business, and probably start to look to invest a little bit more in skills and resources," Venables said.

(Editing by Mark Potter)