EL Consult says that after its significant retraction the prior month, E.L. Executive Demand Index recovered 3 per cent in July, and most industry groups were flat or mildly positive,

Grant Montgomery, Managing Director of E.L Consult a human resources search firm that has researched and published the E.L. Executive Demand Index over the last 30 years, said: “After last month’s unprecedented decline there has been a slight levelling but by no means anything to make up for the fall suffered last month.

“Given that interest rates have a significant effect on projects’ viability it would be fair to say that this month’s rise would not be driven by hiring for any new capital projects - only ones already committed to,” Grant Montgomery said.

“It is now just over a year since the first increase in official rates – May 2022 – and even then, the pundits were saying that rates would not rise that significantly.

“So budgets and projects now coming into place or ongoing would have been decided upon and given the green light before the total increase in rates dawned upon them.

“Also, the Reserve Bank has found that projects over the past decade have been decided upon with a relatively sticky hurdle rate built in; ie, that the level of rates is not the be all and end all of how managers determine whether to go ahead with projects.

“I cannot be confident that this will be the case in the future – rates have been so low for so long managers might have simply underestimated the costs of money inherent in higher rates – but for the moment this tendency may be giving this index more buoyancy than perhaps is warranted.

“After all, even after the recent falls in demand, the overall level of executive demand is still 4 per cent above the same period last year.

“It is still our view, based on the E.L Index that, as a lead indicator, the economy is weakening, and itseems that the Reserve Bank is on the same page. The savage rises of the past take a little while to alter spending habits but that is now clearly happening.

“Good news for middle Australia - the main homeowners and mortgage holders.

“Of course, that is as long as they can keep their jobs as there are far fewer new jobs now being created.

“Among the industry sectors, the main highlight was a 6 per cent increase in Engineering which is good for capital works programs.”