The IT industry suffered a fall of 21% in executive demand during June, while the overall drop across all business and industry sectors dropped just 1%, with executive employment up over the full financial year.
EL Consult managing director Grant Montgomery said that while IT was the worst performer overall this is “quite common” at this time of year.
“The E.L Index only measures the most senior technology positions and is therefore linked to large systems investment and development.
Montgomery commented that Information Technology “seems to be falling no matter what is happening in the broader index, having fallen when the overall index has risen, and fallen when the overall index has fallen.”
But, the EL chief says that while executive demand in IT fell 21%, the percentage movements are accentuated by the sector’s small base.
Nationally, Montgomery says that while marking a negative result overall, the IT sector in Queensland moved forward, and losses in all other states and territories “were more than enough to push the index into negative territory.”
On executive demand across all business and industry sectors, Montgomery says that “international calamity” had failed to dampen business confidence with executive employment up over the financial year.
EL says that the fall of 1% in demand in June compared with the previous month produced a mediocre end to the financial year - described by Montgomery as “a ‘wishy washy’ end to a very positive financial year.”
“For the first time since the beginning of the GFC executive demand has risen over the space of a financial year. From June 2014 to June 2015 executive demand rose by 12%, prompted by record low interest rates and an economy, which, if not flying was, at least, highly positive especially in light of the end of the mining sector boom.
“These gains suggest the Australian economy is ‘moving on’ from the heady growth of the mining boom and now re-establishing itself in other areas such as infrastructure and housing construction.”
According to Montgomery the June result with a small drop of just 1% wasn’t much more than the seasonal adjustment often seen at the end of a financial year when companies put employment plans on hold and complete the last year’s outstanding projects and finalise accounts.
“The fall in June occurs after four consecutive months of increases from January to April and in effect is a slight consolidation.
“This small adjustment comes at a time of considerable international calamity as the Chinese stock market value drops trillions and the Greek debt threatens the stability of the Euro. In this light and compared to other economies around the world Australia is travelling OK.”
Commenting on the demands for executives on a state-by-state basis, Montgomery says that the big States get bigger and “it appears that the bigger economies are again the engine rooms of Australia with the smaller States falling well behind.”
By way of example, Montgomery says that in mid-2011 New South Wales represented 32% of all executive jobs and Victoria 25%, but now, four years on and post the mining investment boom, N.S.W has a massive 45% of all new executive jobs and Victoria 31%.
Montgomery says the two big states now represent together 77% of all executive positions “which speaks well of these economies but can also be an indication of potential problems down the track.”
“Nothing is starker about the end of the mining boom than the states of Western Australia and Queensland’s executive employment.
“Most new engineering jobs, in particular, which are closely correlated to capital investment have moved to NSW and Victoria. More executive jobs in the main capitals has, no doubt, helped fuel the real estate boom in those States and could over time stifle regional development and increase geographic inequity,” Montgomery concludes.