And the September report from recruitment firm EL Consult contrasts with the report for August when the ICT sector delivered a second consecutive monthly rise in demand for executives, with demand jumping by 4% for the month.
But the drop in executive demand for ICT in September heralds an abatement in the prior “sawtooth” nature of the sector, according to EL.
The index shows that Queensland was the mainstay of the ICT sector in September, partially counteracting losses in the larger states of Victoria and New South Wales.
Aside from the drop in ICT, across the board nationally executive demand recorded another strong 6% increase in September which EL says puts its 22-year index at its highest level since the GFC.
Every state and region was strong in executive demand, apart from Victoria and the smaller regions of Tasmania and the Northern Territory, while New South Wales’s result was underpinned by gains in engineering, management and marketing.
According to Grant Montgomery, managing director of EL Consult, the recent gains in executive demand in Australia are indicative of relatively strong and growing local and global economies.
“Australia is booming with infrastructure and housing development leading the charge and well and truly replacing the resources boom of some years ago.
“With so much work going on the state governments had to give back $364 million in grants to the federal government, some states were being forced to slow down projects due to the difficulty in getting projects off the ground on time.
“Corporate profitability is such that the federal government’s final budget bottom line for the 2018 financial year is $4.4 billion better than forecast.
“With the good current conditions, we need to put more emphasis on tax and employment law reform. The government cannot be seen to have squandered the benefits of the current strong economic conditions in the same way it squandered the benefits of the mining boom.
“The only things that seem to be holding us back are consumer spending, as seen by a retail sales slump, and slow wages growth.
“If these were to strengthen then inflation would become a concern and the Reserve Bank would be taking a hard look at moving interest rates up.”
Montgomery says the setting of interest rates in Australia is “perhaps more problematic than in other countries”.
“There is likely to be increasing pressure on wages growth and therefore inflation. This would normally lead to the Reserve Bank increasing interest rates, but this is a dangerous move in the Australian environment where home owners are so heavily leveraged.
“Globally, conditions are improving too and not just in the US. The US is looking to normalise its interest rate policy, but other countries in Europe have moved away from their prior 0% (and sometimes lower) interest rates.
"It’s a bit of chicken and egg if we get wages growth then we risk inflation, with inflation the Reserve Bank will be forced to put up interest rates. Rising interest rate without sufficient wages growth in the highly leveraged housing market increase the potential for mortgage stress and loan failures,” Montgomery said.