New jobs for Australian executives fell 18% in November, as the continued rise in interest rates fueled domestic and international uncertainty, according to the EL Executive Demand Index.
Grant Montgomery, chief executive of executive search firm EL Consult, which researches and publishes the EL Executive Demand Index, said: “This is a significant drop and suggests we are going to have a very volatile 2023. in employment – both for managers and in general.”
“Although it is doubtful that Australia will experience a recession in 2023, the global situation is far from positive and businesses and government are anticipating a difficult year,” Montgomery said.
“Right now, minds are turning to the holidays. It’s been a tough year, and many are celebrating the end of 2022 early. Hiring new executives is not a priority.
“The private sector is deeply uncertain that the new industrial laws will bring positive results in terms of employment, but it is certain that one of the results will be an increase in operating costs.
“The decision to go through the work and commitment to increase the executive headcount when it may need to be reduced during the year is an easy ‘don’t do it’ decision.
“And while general employment is protected by strong consumer demand, it also faces a calmer future. Big new projects that employ hundreds of people are on hold and this will eventually start to impact the general employment
“Victoria led the way lower this month, dropping a whopping 49%. Elections often take people’s attention away from jobs, but a drop of this magnitude is surprising and a record for the state.
“All groups have fallen in Victoria, including engineering and the government sector.”
Montgomery said the inflationary situation that led to the eight consecutive increases in official interest rates is still in play and the main effects are yet to come. Many mortgage holders are fixed rate and won’t see a change in repayments for a few months yet.
“But big plans for the future in private equity are quickly reassessed.
“On the positive side, food-producing areas are starting to see beyond the weather disasters and massive shortages that have driven prices up. That should ease some of the current inflation pain.
“Up to a point, many suppliers have used the noise of inflation created internationally to raise their prices, all with the ready excuse of raising costs from a ‘spiral inflationary’. Fortunately, this opportunity will pass when competition again puts downward pressure on prices and suppliers focus on their market share.
“Let’s hope that, despite the predictions of some ‘economists’, the Reserve Bank will pause for a moment to see how interest rate hikes affect the economy before hitting it with more hikes.
“It is important to note that although the international situation has a major influence on our economy, we are quite different from the situation facing the US Federal Reserve. In the United States, most home mortgages have fixed terms of 30 years, and the impact of rising interest rates on inflation is much slower.
“Furthermore, the Federal Reserve is largely controlled by a consortium of American banks, and it understandably has those interests at heart.
“For example, an increase in the official rate of say one to two percent can lead to a 100 percent increase in profits for banks because they have largely blocked the money already lent.
“Fortunately, the RBA is on the ball and not raising lending rates in the same savage way as the Federal Reserve. The management sector was the weakest with significant drops in demand from Victoria and Queensland The only two regions to make progress in management were the Northern Territory and the ACT Demand in the sector was weaker in the corporate and public administration sectors Finance and information technology were the only sectors to progress during the month.
“All states and territories recorded negative results except for New South Wales, the Northern Territory and the ACT. These gains were not enough to offset losses in other regions, including in Victoria.