Australia is sleepwalking into an Economic Swamp: Stagflation and Recession Looming
Low productivity, record government spending, and excessive immigration are creating a dangerous mix for the Australian economy.
We are edging closer to an economic downturn with executive employment continuing to decline — falling 12 per cent over the past year — as businesses and the broader economy struggle under the weight of falling productivity, government overspending, and reliance on externally sourced consumer demand through excessively high immigration.
Grant Montgomery, Managing Director of E.L Consult, a leading executive search firm that has tracked executive employment for more than 30 years, said the warning signs are all pointing to some serious structural problems.
“Stagflation — when costs rise and employment falls — is already here. A recession, or at least a serious economic correction, is on the way.”
Productivity Collapse and Government Overspending
Record government spending at all levels hasn’t helped and productivity has “essentially flatlined.” Mr Montgomery said,
“Productivity growth in Australia is now running at just one-fifth of its five-year average and now ranks second-last among developed economies — only slightly ahead of Mexico. This is alarming, as the Productivity Commission has pointed out, productivity growth is the primary driver of rising living standards for Australians.”
According to Mr Montgomery, federal authorities have shown little inclination to make meaningful regulatory reforms, instead relying on higher tax revenue and continued migrant intake to prop up short-term growth.
The E.L Executive Demand Index rose by 3 per cent in October but remains 12 per cent lower than a year ago.
“We’ve tracked executive employment for more than three decades — through two major downturns and multiple booms,” Mr Montgomery said. “While conditions might appear steady for some in the capital cities, the nation is sleepwalking into an economic swamp.”
Warning Signs Mount Across the Economy
Recent data underscores the risk:
GDP grew just 1.3 per cent over the 2024–25 financial year — the weakest annual growth since the early 1990s.
Capital expenditure is stagnant.
Inflation is higher than expected.
Unemployment is on the rise.
“Behind these headline figures, the picture is even worse,” Mr Montgomery said. “Executive employment, a proven lead indicator of general employment, is down sharply across most sectors compared, and small business insolvencies are at record levels.
High immigration and massive government overspending are the only things keeping the Australian façade intact.”
Treasury projects that government spending will reach 27 per cent of GDP this financial year — an unsustainable level, Mr Montgomery warns, “If this continues, it will inevitably result in higher taxes, continued rising unemployment, and eventually a voter backlash,” he said.
Fragile Growth and Regional Differences
The latest E.L Index results show that marketing and information technology roles were the main drivers of October’s modest increase.
“Historically, this pattern suggests that employers — after exhausting cost-cutting measures — are now focused on grabbing market share in a tough environment. Unless there’s a policy shift soon, we’re in for some difficult years ahead.” Mr Montgomery said.
Among sectors, Marketing, Finance, and Information Technology recorded gains, while Engineering and Management remained flat. Every sector except Marketing is well below year-ago levels.
Regionally, the smaller states led the way: South Australia, Western Australia, the Northern Territory, and the ACT all recorded improvements. Modest growth in Victoria and a small decline in New South Wales — the largest executive job market — dragged down the national result.
Call Grant Montgomery on +612 9221 6688 or 0414926688 for further details
October 2025 Statistics
October 2025 National Index
October 2025 National Index: 484
Same period last year (October 2024): 548
Percentage change over last month: 3%
National Summary
The long-term trend for the hiring of Australian executives is down, falling 12 per cent in the past year as the business sector and the broader economy are affected by productivity stagnation, government crowding out and a reliance on externally sourced consumer demand. In October, the Index rose 3 per cent compared to the prior month.
National Demand for Executives Over Last Seven Years
The executive demand long-term trend makes for a harrowing image, continuing to fall sharply from its 2023 highs.
State by State Comparison
The smaller states led the way in October, with South Australia, Western Australia, the Northern Territory and the ACT recording improvements. However, a small gain from Victoria and a mild loss in the largest supplier of executive positions, New South Wales, pulled down the overall result.
Executive Groups
Among the sectors in October, Marketing was joined by Finance and Information Technology in registering gains, while Engineering and Management were largely flat. All sectors except Marketing are well below their equivalent readings of a year ago.
October 2025 E.L Finance Index
October 2025 E.L Finance Index: 781
Same period last year (October 2024): 835
Percentage change over last month: 4%
The EL Finance index rose 4 per cent in October but continues to bump along its long-term negative trend.
The smaller states were the ones to make progress, led by Western Australia and the ACT.
Victoria saw an uptick while Queensland and New South Wales were negative.
Government sector demand was clearly the mainstay of the increase, with job demand jumping sharply off a smaller base versus the smaller increase in the business sector.
October 2025 E.L Engineering Index
October 2025 E.L Engineering Index: 225
Same period last year (October 2024): 278
Percentage change over last month: 1%
Engineering recorded a slim 1 per cent gain in October but continues to lose ground over the longer term.
Results were markedly different across the country, with executive demand stronger in the larger states of Victoria and New South Wales, but weaker in all of the smaller regions.
Of note is that the ABS is reporting that many government sector infrastructure projects are coming to an end, so this may go some way to explaining to the falls in positions in the past year. The flight path of future projects is uncertain, given the now recurring higher staff costs that will require baking in to budgets at the state and national levels.
October 2025 E.L Management Index
October 2025 E.L Management Index: 649
Same period last year (October 2024): 831
Percentage change over last month: 1%
After being the joint leading sub-index in September, the Management index recorded a 1 per cent increase to be behind the average result.
Although the outlier September 2024 increase has now dropped away from the annual number, the Management index is still showing a 21 per cent decrease since October 2024 – a significant fall raising questions as to how many executives in the business sector are feeling the heat, given that the government sector has held up.
This month, for example, government sector web-based demand rose 37 per cent compared with the prior month, while business sector demand was flat.
The large states may be seeing more cuts than the smaller regions, with New South Wales and Victoria flat and negative, respectively. Western Australia was the strongest significant player, which, interestingly, now is seeing demand approximately 45 per cent of Victoria despite a significantly smaller population.
October 2025 E.L Information Technology Index
October 2025 E.L Information Technology Index: 158
Same period last year (October 2024): 186
Percentage change over last month: 7%
The sawtooth treatment of Information Technology was again the flavour of the month, registering a 7 per cent rise on the back of higher government and business demand. However, in reality, this equates to a relatively small amount of actual job offers given this index’s small base.
However, IT execs will be happier to see that the index has seemingly moved away from its recent bottom thanks to two positive months out of the past quarter.
It is difficult to predict confidently where this index will be going next, with the green shoots being seen able to be burnt away very quickly by one large future downward move as has occurred in the past.
October 2025 E.L Marketing Index
October 2025 E.L Marketing Index: 550
Same period last year (October 2024): 483
Percentage change over last month: 6%
Marketing is showing clear positive longer term signs, with its trend moving subtly higher helped by the 6 per cent gain in October.
Although good for Marketers, the signal may not be good for the broader economy; marketing is more about a battle for market share than expanding the overall GDP cake through good new products or investments. It may also reflect the influence of AI take-up, with management required to navigate the smart insertion of AI skills into the marketing stack as lower level staff are laid off.
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 paper in each state. National papers are not used to avoid “doubling up”. Internet data is not collected off the web sites 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 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.
