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Employers are returning to the milk round as demand for graduates is expected to increase by 10 per cent this year, according to a new report from Incomes Data Services.

A survey of more than 100 leading employers revealed that the majority either increased or did not change their use of the milk round in 1994. In the previous two years employers cut back on milk round recruitment. Various companies reported that improved relations with universities had prompted their change of policy, including construction firm Bovis and West Midlands Travel. Tesco believed that by recruiting during the spring milk round, it was able to enlist the highest calibre graduates.

The report said that increasing demand, which follows the sharp recovery of 14.5 per cent last year, still means "there is a long way to go before recuitment activity reaches 1980s proportions". But it did find one company which indicated that its recruitment demand was comparable to the late 1980s.

The service sector is expected to lead the way in the race to recruit graduates, expecting a 12.2 per cent increase across the board. Tesco will take on 100 graduates, more than last year. Sainsbury, which last year recruited 83, will also take on 100.

Because of the high number of applications growing demand is not expected to push up starting salaries, which are projected to rise by an average of 2.7 per cent to just over Pounds 14,000. Sixteen employers have said they will freeze starting salaries, including Allied Dunbar, IBM, Mercury Communications and KPMG. For those already in employment, earning prospects look healthy. Graduates employed in 1989 have salaries on average 56.6 per cent higher than 1994 recruitment rates.

Mercury has introduced a new computer system known as Resumix into which CVs are scanned or faxed directly by the graduates. Mercury plans to take on 40 graduates this year.