Recruitment giant Reed Executive has urged caution over the strength of the UK economic recovery.

The firm, owner of businesses including Reed Accountancy Personnel and Reed Learning, said it had noted an improvement in trade over the first three months of the year.

"[This] may which may lend some credence to the argument that the low point in the economic cycle has been passed," chief executive James Reed said.

But the firm's turnover during the January-to-March quarter was 10% lower than it was a year before.

"Market conditions continue to be unpredictable," Mr Reed said.

Directors remained "cautious a out the economic outlook for the remainder of the year".

Internet boost

Reed saw its own growth slow "markedly" over the last six months of last year as the UK economic slowdown undermined the firm's core employment markets.

"The second half of 2001 presented a significant challenge," Mr Reed said.

But strength in the accountancy and insurance markets helped offset weakness in technology employment operations.

The firm, which has invested heavily in internet operations, said it was "very pleased" with progress at its Reed.co.uk website, which "consistently" advertises "more than 80,000 jobs any given day".

The number of visits to the site has surged from 8 million last year to 4 million in the first three months of 2002 alone.

Temp market clampdown

A �373.6m figure for pre-tax profits last year, up 18% on 2000, included a �1.28m charge to pay for litigation against divisions of publishing giant Reed Elsevier.

Reed Executive in July 2000 began a High Court action against the businesses over claims of trademark infringement and passing off.

Ruling on the case, which was heard in January, is expected soon.

Reed Executive also said it was fighting regulations the European Commission is proposing to give more rights to temporary workers.

"In its current form [the directive] should be unacceptable to the UK recruitment industry... which accounts for half of Europe's temporary workforce," Mr Reed said.

"Currently, there are elements in both drafts that concern us and we will continue to argue for their improvement."

In the City, Reed shares stood 5p lower at 157.5p in late trade on Monday.