In its latest report on executive demand, search firm E.L.Consult says that a fall in the Australian executive employment market in March has confirmed that “economic recovery is bound to be rocky.”
The E.L.Consult Index for March shows that the IT sector had the third largest negative demand after Management and Marketing.
Last month, the IT sector index was at 118 points, down 14% from 198 in March last year.
“It continues to struggle to make headway although the significant losses of earlier in the decade seem to have come to a close.”
Montgomery says that in the IT sector last month, the losses were in Queensland, Western Australia and the ACT, while the only regions to gain ground were the smaller states.
Across the national economy in all industry sectors in March the EL index lost 20% compared with February, “indicating it has managed to retain its recent growth but only marginally,” Montgomery says.
“The result means executive employment has kept some, but not much, of the gains made in February,” Montgomery observes.
“While the signs are that the executive employment market is stabilising, the AUD’s strength is affecting overall economic strength, particularly when it was expected to fall rather than rise.”
Montgomery said he didn’t think there is going to be a fast recovery in economic activity or executive employment growth in Australia in the near future.
“What we are more than likely to see is a slow and steady improvement. February had one of the largest recoveries in executive demand in some years but March has fallen back maintaining only a small proportion of those gains.
“The trend is still upward which shows the economy is getting back into gear but a recovery is not going to be as rapid as first thought.
“Executive demand as a strong correlation to general economic conditions with engineering correlating to future capital investment, finance demand to bank lending and overall the employment of all executives is closely linked to business confidence particularly in the bigger east coast service economies.
“Clearly Australian business is much more confident in the future than it was 12 months ago but it is not a sellers’ market for executive positions and this is a long way off. In some ways this is a good thing as means salary inflation will also be slow.”
According to Montgomery, a lot of businesses are still accessing their costs base and looking for ways to reduce costs and maintain margins. “Some of these businesses are finding that they cannot continue in Australian and are moving operations off –shore.”
“The closure of a business has of course an immediate impact on executive jobs and it takes some years before other businesses or industries develop to a size that employs more people at the top level. While overall executive demand is poor the fact that it is now slowly trending up is an excellent turnaround on the last to 5 or 6 years.
“High costs of employment is further exacerbated by the high dollar and while this improved recently it now appears to be slowly creeping up again making cost planning difficult.
“On the positive side the government has pushed the signing of free trade agreements which will have significant benefit particularly to the horticultural sector.
“So these pluses and minuses all add up to uncertainly and this is exactly what is occurring in the executive employment market.
“In any uncertain commercial environment it is human nature to put off on hiring intentions, even if budgets are being met,” Montgomery concludes.
EL reports that the corrections in executive demand in March were relatively broad, with Western Australia and Queensland suffering the most due to retractions in demand for Management and Marketing executives.