EL Consult managing director Grant Montgomery said Information Technology has “bucked its usual trend” and put in a mild result in March – falling by 3% - which represents a percentage change over February of -1%.
“Although the reduction was mild, it left the index just below the same month in 2015,” Montgomery also notes.
And, he says, “a mild increase in New South Wales was enough to anchor last month’s result in ICT, helped along by gains in Western Australia and the ACT”.
He also said the stabilisation of the Index was reflective of a number of different factors, while cautioning that “uncertainty still abounds”.
“There is caution in the business community as there always is when Federal elections are looming and federal budgets are coming.
“But the uncertainly is exasperated this time around because not only is the timing of the election and budget uncertain but the form of the budget and any taxation changes that it may contain are completely unclear.
“No one can blame employers for sitting on their hands right now and being cautious.
“It is really quite amazing that there is any activity at all,” Montgomery said.
The EL Consult Index for March reveals that retail sales are muted, reducing expectations that consumer spending will continue to power the economy, while consumer prices were actually lower in March compared with the prior month.
“The annual rate of inflation has also fallen below the Reserve Bank’s 2 to 3% target band,” Montgomery observes.
“This all says the Australian economy is continuing to grow, but (at) a moribund pace. Even the star housing construction market looks to cooling slightly.
“The Reserve Bank wants to keep the dollar value down but hasn’t enough reasons to cut interest rates just yet.”
Montgomery says he also wants some direction from government.
“Some Government direction would be great. We are all waiting on some election and budget certainty and hopefully if it goes the way of double dissolution then the government have some expectation that any proposed and budgeted spending or taxation changes will not be dead-ended in the Senate”.
According to Montgomery, the sectoral results of the EL executive demand index reflected overall Australian economic trends.
“Finance continues to rise slowly, giving a good indication of the benign state of the banking market. In fact, a total 1.2% of Australia-wide households fell behind on their mortgages in 2015, with 0.85% in NSW - lower than any other time since 2005.
“Residential building is slowing and large infrastructure projects like the Sydney Light Rail are well and truly up and running. With March now gone there is less attention on recruiting staff and more attention on getting the work done.”
Across the national economy in March the largest states of New South Wales, Victoria and Queensland experienced the largest falls in executive demand, while Tasmania rose for the second consecutive month.
EL says that finance and marketing were the only two sectors to finish the month in the black, with engineering and management sharing the largest percentage fall.