RECRUITMENT firm Hays today said demand from pharmaceutical and City firms was propping up the UK jobs market amid a slump in public sector activity.

The group said net fees in the quarter to June 30 were broadly flat on the previous three months in the UK and Ireland, helped by 10% growth in the private sector. In contrast, the Government’s austerity drive meant public sector fees were down by 14%, with administrative and non-front line services most affected.

Hays generates nearly 60% of its revenues outside the UK and it said it was capitalising on a strong market recovery across Asia Pacific and improving trends in other key markets such as Germany and Brazil.

It reported overall like-for-like fees growth of 8% in the quarter, representing its first year-on-year growth in two years. Hays shares jumped 5% following the fourth quarter trading update.

Chief executive Alistair Cox said: "Whilst we remain mindful of the risks to the economic recovery in many of the countries in which we operate, the outlook in our markets continues to improve."

Net fees from permanent placement business increased by 26% but this was partially offset by a 3% decrease from temporary placements due to the higher weighting to the UK and Ireland public sector market.

In the UK business, Hays reported strong growth in pharmaceuticals, City-related recruitment and corporate accounts. In the public sector, demand for frontline services in education and healthcare was stable.