According to information acquired from Companies House by public relations agency ClearlyPR, an average of 818 new agencies registered each month during the past year. The number currently trading stands at a record 35,275.
The figures have emerged amid signs that the jobs market in the UK could be softening . Paul MacKenzie-Cummins, managing director of ClearlyPR, said growth in the recruitment industry has been driven by continuing skills shortages, and strong hiring activity.
“Last year saw a doubling in the number of recruitment agencies that were founded in 2015, with the sharpest rise coming in the six months after the Brexit vote,” MacKenzie-Cummins said. “Our research has shown that the momentum not only continued into 2017, it gathered pace.
“The dramatic rise in new agencies being started over the last year is testament to the overwhelmingly positive mood within the recruitment industry.
"Ambitious recruiters are not only seeing an increase in demand for the services of recruitment agencies, they're taking advantage of favourable market conditions and the opportunity this presents for aspiring recruitment entrepreneurs.”
The highest number of recruitment start-ups were registered in March (1,208), followed by January (1,132) and August (1,067). A total of 5,709 were established in the first six months of 2017, compared to 4,297 in the second half of the year.
The Recruitment and Employment Confederation (REC) predicts that 56 per cent of all vacancies during the next 12 months will be filled by agencies, an increase of 10 per cent since 2015.
“2016 was a landmark year for the recruitment industry, yet 2017 has defied the expectations of even the most optimistic of forecasters,” MacKenzie-Cummins said.
“While uncertainty remains over the possible ramifications over how the UK's withdrawal from the EU will impact on businesses and the economy, the research suggests that the growth in new agencies entering the market is down to three key factors.”
These include skills shortages which are being exacerbated by Brexit, and what has to date remained a robust jobs market.
The final factor is an increasing desire among recruiters to be in control of their own destinies in the wake of the fall-out from the last recession.
As many as one in five closed their doors as a direct result of the economic decline created by the banking crisis.
This prompted a “slow and steady” rise in the number of recruiters opting to go it alone, with a tripling in the number of recruitment start-ups since 2015.
Just 1,074 new agencies were registered at the height of the recession in 2010, and by 2014 that figure had risen to 2,504. The following year that number rose to 3,250.
The explosion began between 2015 and 2016, when the number of new starts doubled to 6,485. That has since increased by almost a third during 2017 to date.
“To say the recruitment industry is resilient would be one of the greatest understatements of the year,” MacKenzie-Cummins said.“It took a battering during the downturn only to emerge in stronger shape and since then it has grown to become the largest it has ever been – both in terms of the number of players operating in the market and the revenues generated.”