New jobs for executive positions in Australia in July were the lowest in three years.
Despite the political pressure it’s obvious why the Reserve Bank will not cut rates anytime soon.
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Demand for Executive Positions in Australia in August 2024
The executive job market resumed its downward trend to move to its lowest July result since 2021, according to the E.L. Executive Demand Index.
The E.L Index fell 7 per cent in July to move to its lowest point, apart from the Christmas slowdown, in three years.
Mr Grant Montgomery, Managing Director of E.L Consult, a leading human resource firm that has researched and published the E.L. Executive Demand Index for over 30 years, said:
“Month by month, new jobs for executives are now their lowest since the height of the COVID epidemic.”
“This is while interest rates are at their highest point since 2011.”
“As the average executive has a mortgage and will be paying increasingly higher interest rates it is not a good situation for middle Australia.”
Economic Challenges and Policies
The real effects of the current economic settings are only now just starting to happen.
“The RBA is confronting a weakening economy. Pain is still accumulating across the economy due to the lagged effect of the RBA’s 13 interest rate rises.”
Mr Montgomery said the current situation highlights the regrettable situation in which the RBA finds itself. High inflation, a steeply slowing economy and rising unemployment.
“The RBA does not have the tools to control the best outcomes for the economy. Instead, it is expected to use the blunt instrument of interest rates to bring down the level of Australian inflation, without taking into account monetary policy’s effects on other very important elements of the economy like business investment and employment trends.”
Interest rates are powerful but very selective on homeowners. These are hard workers and the strength of the economy. Now they are running scared as their fixed interest rate contracts expire.
“The Federal Government is not helping with its implementation of fiscal policy.”
“We cannot expect anything radical from Canberra – they are used to high taxing and high spending policies that only exacerbate the current situation.”
“It seems like there is a bifurcation in how the economic levers are being operated.”
Government Role and Economic Impact
“It is interesting that governments have done their best to curb the RBA’s control of monetary policy and yet there is no cry to wrestle away fiscal policy or at least make it a little more independent of the
politicians and bureaucrats.”
“Taxation and government spending could be used as sharp tools, to help inflation and build the economy, but governments see it as purely a revenue source to gain funds to hand it out to political causes that will help their election prospects.”
“As soon as an industry, whether it be wine, property development, construction, mining or education to name a few become internationally successful, politicians bring in a host of new regulations and taxes that do their best to destroy the industry.”
“And it doesn’t end there. Once the industry is on its knees the taxes continue and once successful businesses fade and are unable to compete internationally.”
“For example, both state and federal governments have very high taxes and regulations on housing development and there is no call to review these regulations and taxes now there is a major hosing
shortage.”
“There should be an independent body like the Reserve Bank that oversaw taxes so they weren’t used as a political tool. Politicians are not good at building economies and Australia in particular would be richer and better able to support the poor and dispossessed if they didn’t spend time looking a ways to
tax more.”
“High interest rates are now biting in all western economies and even the US economy is seeing signs of interest rates biting hard.”
“The July non-farm payrolls data released last week jolted Wall Street with the number of new jobs added missing estimates and the jobless rate rising faster than expected.”
“The outlook for the world is not good.”
“Local Australian demand for executives saw significant falls in financial, engineering information
technology, senior management and even government positions.”
All States fell with the exception of Queensland due to a strong pickup in IT positions. Victoria fell a massive 10 per cent – almost previously unheard of in an economy of that size.
Call Grant Montgomery on +612 9221 6688 or 0414926688 for further details
July 2024 Statistics
July 2024 National Index
July 2024 National Index: 497
Same period last year (July 2023): 641
Percentage change over last month: -7%
National Summary
The executive job market resumed its downward trend to move to its lowest July result since 2021, according to the E.L. Executive Demand Index. The Index fell 7 per cent in July.
National Demand for Executives Over Last Seven Years
The reduction in the E.L index in the last year is obvious and is likely to move lower again when the result from May drops out.
State by State Comparison
All states fell with the exception of Queensland due to a strong pickup in Information Technology positions. Victoria fell a massive 10 per cent – almost previously unheard of in an economy of that size.
Employment Trends for Executive Groups
In the business sectors, demand in Australia in July for executives saw significant falls in Financial, Engineering and Information Technology across senior management positions in the business and government sectors.
July 2024 E.L Finance Index
July 2024 E.L Finance Index: 709
Same period last year (July 2023): 955
Percentage change over last month: -13%
Financial positions have resumed their downward trend, dropping a further 13 per cent in July to lose all of its gains from May.
The Finance index is now close to its three-year lows, even when taking into account the seasonal Christmas slow downs since that time.
Every state and territory except for Western Australia moved lower over the month, with WA benefiting from gains in business sector positions.
July 2024 E.L Engineering Index
July 2024 E.L Engineering Index: 254
Same period last year (July 2023): 349
Percentage change over last month: -7%
Engineering recorded a 7 per cent decrease compared with the prior month, resuming its downward trend.
Since its high of March 2023, the Engineering index has slowly but surely fallen, virtually negatively correlated with the most recent interest rate increase cycle that began in May 2023.
The losses were widespread across the country, with small gains in New South Wales and ACT not enough to push the overall index to a positive result.
July 2024 E.L Management Index
July 2024 E.L Management Index: 717
Same period last year (July 2023): 949
Percentage change over last month: -7%
The Management sector fell 7 per cent in July compared with the prior month.
The last two months’ results have seen the Management index fall prodigiously and end up close to its most recent low including seasonal Christmas effects, and be definitely at its low if the seasonal Christmas effects are ignored.
In July, losses across most states and territories were partially offset by gains in Queensland and Tasmania.
July 2024 E.L Information Technology Index
July 2024 E.L Information Technology Index: 201
Same period last year (July 2023): 305
Percentage change over last month: -11%
Information Technology fell 11 per cent in July.
Like all the sectors in July, there were little signs of positivity in the IT index during the month as it moved towards its lowest levels in the past three years.
July 2024 E.L Marketing Index
July 2024 E.L Marketing Index: 500
Same period last year (July 2023): 545
Percentage change over last month: 1%
The Marketing index was the only index to put together a positive result in July, gaining 1 per cent.
The index seems to remain within its recent trading range that was begun in 2022.
Amid the states and regions, gains in NSW and Victoria were enough to counteract significant losses in Queensland and the ACT.
About the E.L Index
The E.L Index is a comprehensive monthly analysis of employment trends at executive level. An Australian analysis is produced in Sydney and an Asian analysis in Hong Kong and Singapore.
The E.L Index has shown by two separate University studies to correlate strongly with general economic and business trends. It is featured by most of the major news services and is closely followed by government and central bank analysts.
The E.L Index is actually a combined national index of all executive demand made up of five separate indices;
E.L Finance Index, E.L IT Index, E.L Management Index, E.L Marketing Index and the E.L Engineering Index.
The National and specific career group Indexes are shown as relative indexes recording the monthly demand
activity for executive positions in the current month against the demand in a historical base period which is normalised to 100. The historical base period used was the average of the last quarter of 1992 which research showed to be the bottom of that downturn.
By averaging to a historical base period the comparison of, say, June 1994 to June 2000 is meaningful, giving a clean, easily understood appreciation of changing investment and economic trends without seasonal obscurity.
The E.L Index utilises data from both print and internet sources and is the only employment index to do so.
The print data is collected from the major employment papers in each state. National papers are not used to avoid “doubling up”. Internet data is not collected off the websites which can be subject to some error but instead collected through raw data provided by the ISP themselves. Print data has over 15 years of historical data and the internet for more than 6 years.
Why Executive Demand is a Primary Lead Indicator?
It is often claimed that unemployment figures and broad-based job vacancy surveys do not give a fair impression of what is occurring in executive ranks. The E.L Index addresses this and has some interesting correlative and predictive qualities. Such as:
- Employment of management usually precedes the employment of skilled and unskilled workers.
- Employment of engineering executives precedes major capital investment.
- The division between various management sectors gives an indication of which sectors of the economy are experiencing growth or decline.
- Compares month-by-month changes in the public and private sector as well as monitoring government expenditure patterns.
- Makes regional comparisons after allowing for population differences.
- It shows a ‘rate of change’ and can therefore be realistically compared to general economic and employment growth, unlike some surveys that report absolute numbers.
- Core data is collected on an actual expenditure of business and government, not on a respondent’s opinion or confidence level.
