The graduate recruitment market has deteriorated "sharply" and there is little sign of it picking up over the coming year, according to a leading analyst.

Recruitment 2002

Manufacturing: -11.3% Service sector: -5.3% Finance: -10.2% All private: -6.8% Public: +13.3% All: -3.4%

The picture is painted by employment researchers Incomes Data Services (IDS), who said there had been a sharp turnaround in the market's fortunes.

The "lack of recruitment activity" was having a knock-on impact on starting salaries, and the picture contrasted strongly with the buoyant market for jobs two years ago when demand was increasing at a rate of 9% and starting salaries were growing by nearly 6%.

Continuing economic uncertainty, and falling business demand were to blame, IDS said.

Last year

Graduate recruitment fell by 3.4% in 2002, with the largest cuts taking place in manufacturing and finance.

Forecast for 2003

Manufacturing: +2.2% Service: -2.8% Finance: +4.5% All private: -1.3% Public: -0.7% All: -3.4%

The overall drop in recruitment in the service sector was lower at 5.3%, but there were wide variations in demand.

At EDS, for example, just 12 graduates were taken on in 2002 compared to 400 in 2001.

In contrast, six retail companies, including the Arcadia Group, Somerfield and ASDA, increased their demand for graduates.

A decline in graduate jobs was not present in the public sector, with demand up by 13.3% last year.

Net search

Almost all organisations now use the internet for recruiting graduates, according to the survey.

Starting salaries

Starting salaries ranged from �9,500 to �35,000

Companies are increasingly demanding online applications as well, with two-thirds of companies offering the service.

But when it came to sifting through the applications, 42 employers found graduates lacking various skill areas, particularly business awareness and communication skills.