Only a third of students graduating from the UK's top universities plan to enter the graduate jobs market this year and a mere one in seven say that they will be spending the summer job hunting.
The 2004 UK Graduate Careers Survey of nearly 16,000 final year students at top universities in the UK and Ireland reveals widespread gloom about job prospects and reinforces fears that the UK is producing too many unwanted graduates.
The 35 per cent of students who said that they planned on entering the graduate jobs market was the lowest since the survey began in 1995, when the figure was 37 per cent.
More than a quarter of students plan to undertake further study, while one in five will taking time off or go travelling.
Only a fifth thought that they would go straight into employment.
Despite the government's insistence that they want more young people to go into higher education, the message from students is that they believe there is an oversupply of graduates.
Only just over one in ten (12 per cent) of those surveyed believed there were enough jobs on offer that required degrees. Almost two-thirds (63 per cent) said that the supply of graduate-level jobs was insufficient for the number of students gaining degrees this summer.
At its annual conference earlier this week, the British Chambers of Commerce said that the government's university admissions targets should be scrapped and the emphasis moved towards skills and vocational training.
Martin Birchall of High Fliers Research, which carried out the survey, said: "There is a widespread feeling at the UK's top universities that there are not enough jobs available for new graduates and therefore student confidence in the employment market is extremely low.
"As a result, tens of thousands of final year students who are due to graduate this summer feel they have no choice but to extend their studies with a postgraduate course or take time away, in the hope that the job market may improve in the next year or two."
The survey found that the most popular careers for the "Class of 2004" are media, marketing, and teaching, with about one in ten applying for jobs in each area.
Applications for high-paying investment banking and actuarial work were up by 17 per cent. Careers with lower starting salaries had seen a drop in popularity with applications to the civil service down by a quarter.
As new graduates, the average starting salary is £18,800 but students also expected to have average debts of £10,300, a 75 per cent rise on the 2001 figure.
Martin Birchall said that the findings "will make dismal reading for the government" as they attempt to introduce variable tuition fees in England and continue to argue for increasing the number of school-leavers going to university.
"Both these objectives rely on there being an increasing supply of well-paid graduate jobs so that students can repay the substantial costs of their studies after graduation - something which the majority of those graduating in 2004 simply do not believe is happening."