Australia has welcomed the new financial year with a 15 percent drop in executive positions, according to the latest EL Executive Demand Index.
According to the index, a conjunction between rising inflation and falling economic growth is choking off the number of Australian executive jobs on offer. Plus, the new corporate conservatism is likely to continue for some time.
The E.L Executive Demand Index fell 15 percent in the month of July compared with the prior month as a number of poor economic growth indicators coincided with the release of inflation figures above the Reserve Bank of Australia's favoured 2-3 percent band range.
Grant Montgomery, managing director of the executive search firm E.L Consult which researches and publishes the E.L Index, said, "Consequently, it is obvious the Reserve Bank had no choice but to leave official rates on hold again this month. The inflation created by the resource sector is not affected and will not change with local interest rates. Any rise will only impact the local non-resource sector which is already on its knees.
"We are in a stagflationary environment of sorts, where both inflation is rising and growth is falling. The RBA is stuck in the middle, having to slow the resource rich economy which is feeding demand-pull inflation, while not choking off the anaemic growth profile of the larger states such as New South Wales and Victoria and their non-resource sector industries.
"Nobody wants to say it, it is the worst possible of all economic scenarios, stagflation, which looks increasingly likely, particularly given the continuing rise of the Australian dollar and the still sickly growth in the US and Europe," Mr Montgomery said.
"The June upturn last month now seems to have been a seasonal anomaly and this month's fall has pretty much averaged out the last two months into the now typical decline in new executive level positions.
"As we said last month when the E.L Index rose 11 percent, the spending on executive positions in the final month of the financial year clearly showed the conservatism of the market.
"Corporate players have waited until the last possible month to spend their budget rather than spreading it throughout the year because the enormous uncertainty they have on the business environment outlook.
"No wonder that Glenn Stevens, the Reserve Bank governor, spoke recently of a ‘new conservatism' that saw most householders more interested in saving than shopping. He also said there were those in the manufacturing, retail and tourism sectors that where experiencing cost pressures. He said , ‘you've got product prices under downward pressure and costs under upward pressure'.
"The reduction in July at the start of the new financial year would tend to confirm this," Mr Montgomery said.
"The losses in July were virtually across the board. We've seen a significant decrease, mostly in the public sector, probably as the NSW Government attempts to reduce the bureaucracy in that state.
"In some ways we are playing chicken with the local economy. Rates are among the highest in the world, the Australian dollar is at its highest level since being floated in 1983, choking off exports.
"Consumer spending is low, corporate confidence is low. About the only that is keeping up confidence levels is the general gross domestic product numbers and they are covering up significant structural income disparities.
"Overall we are currently at 50 percent of the peak level of executive employment hit before the global financial crisis. Australia outside of the China led mineral boom is highly depressed and doesn't look like changing back any time soon."
All sectors fell during the month. The losses were led by the financial and information technology sectors.
Among the large states, Victoria slumped followed by New South Wales.
As could perhaps be expected, the resource-rich state of Western Australia was the only state to post a positive result, up 7 percent on the prior month.
The government the sector was the largest contributor to new demand as non-resource industries continue to batten down the hatches.
Both print-based and web-based advertising fell sharply against the prior month.