The average number of applications per vacancy decreased and 17 per cent of employers reported recruitment shortfalls. So vacancies are rising, applications are falling, jobs aren't being filled and graduates are still looking for work. What is going on?

The graduate marketplace is complex, but some trends are clear. There is a mismatch between the types of jobs on offer and the people seeking employment. This is both a mismatch in aspirations - eg, graduates wanting to work in PR when the vacancies are in banking - and in skills - eg, students unable to provide evidence that they have customer facing skills but wanting to work in management consultancy.

Few graduates understand the importance of timing. The large, prestigious recruiters, who tend to be members of AGR and who recruit significant numbers on a regular basis, like to recruit early in the final year. More and more students, on the other hand, are waiting until the end of their studies to find employment. While this shouldn't make a difference (as most companies, theoretically, recruit all year round), it does. Quotas are the name of the game. Now, at the start of the academic year, employers are universally optimistic in the numbers they think they will need next September and have given their recruitment departments large quotas to fill.

Naturally, when faced with a target of, say, 200 recruits, offers will fly out to anyone who impresses because the investment banks want to beat the lawyers who want to beat the accountants who want to beat the retail banks to the best crop of graduates. As the year wears on and recruiters begin to meet their target numbers they simply get choosier. It's just plain harder to get a job with AGR members in March than it is before December.

So if you are interested in the prestigious graduate recruitment schemes, the advice is apply now and certainly before December of your final year of study.

So what's the market for the class of 2006 like? Most pundits predict a slow-down in economic growth. Both business investment and consumer spending growth have weakened recently. But business and financial services output continues to grow at a reasonably healthy rate and the public sector remains a positive engine of growth for the economy. The situation in the US is worrying and the geopolitical situation is extremely unpredictable, so the recruitment market is cautious.

Most vacancies in 2005 were in accountancy or professional services firms, investment banks, engineering or industrial companies, public sector employers and law firms with almost half of all graduate vacancies being in London, with a further 11 per cent in the South-east of England. Analysed by business function or job type, the greatest number of vacancies for 2005 were for graduates working in chartered accountancy, general management, investment banking, engineering, legal work, and IT.

The good news is that 83 per cent of employers plan to maintain or increase their graduate vacancies for 2006. Manufacturing is in the doldrums, so vacancy numbers will stay static; retailing is faltering, but IT is still climbing from its slump of two years ago. Engineers are always in short supply and global reconstruction and, more locally, the Olympics, are driving the construction industry into a boom period. Public service areas and business services (finance, consultancy, IT, law) are likely to be offering the greatest number of vacancies.

Evidence of the buoyancy in this market is provided by the fact that there are more employers attending the University of London's Career Group's "Graduate Select - Finance, IT and Consultancy" event than ever before. IT companies, consultants and investment banks are back in force, looking for financial managers of the future. In 2005, starting salaries were highest in these areas - investment banking (£35,000), consulting (£28,500) and so competition is fierce.

Students who are interested in attending the Graduate Select fair need an impressive academic record and evidence of a range of other skills. Only 1,500 pre-selected students are invited, so apply now. For more information, visit www.careers.lon.ac.uk

Director, The Careers Group, University of London

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