Fears of a “jobless recovery” were fuelled today after recruitment giant Harvey Nash said employers were yet to start hiring again.

Hopes that better sentiment would lead to more demand for jobs proved unfounded as firms continued to put off hiring new permanent staff, according to the group.

The recruiter warned ongoing woes in the job market would hit full year figures after underlying profits in the third quarter slumped by 72% with no sign of an upturn for its final three months.

The group said: “Although we continue to see increased demand for our IT outsourcing services, it has now become clear that positive sentiment is not yet resulting in increased demand for permanent recruitment.

“Accordingly, we expect that this will materially impact the group’s fourth quarter trading and therefore the result for the full year.”

Harvey Nash shares plummeted 18% on the profits blow as analysts said today’s gloomy update confirmed that 2010 will be another dire year for UK jobs regardless of an economic recovery.

Steve Woolf at Numis Securities said permanent recruitment had been “hit hard” at Harvey Nash, while contractor numbers in the temping business also remain under pressure.

“Our overall staffing thesis sees calendar 2010 as a further challenging year for recruiting companies,” he added.

Harvey Nash saw revenues plunge by 23% in the third quarter as the expected seasonal upturn failed to materialise.

A typically strong October was impacted, with permanent recruitment revenues down 4% month-on-month and the firm now expects second half trading to be broadly in line with the first half.

But the firm said it still expects to remain profitable despite the revenue slide.

The group has UK offices in Birmingham, Leeds, Edinburgh and London and specialises in IT recruitment.

The firm also offers outsourced software services based in Asia to blue-chip clients across all sectors and has seen poor recruitment trading partially offset by increased call for offshoring.