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The shutdowns created by Coronavirus have caused Australia to fall into recession.
And while there are green shoots appearing, there are plenty of unknowns ahead.
Leading research house Roy Morgan recently discussed what the key indicators tell us about the economic story for 2020 so far and what’s ahead.
Here is what those measures show us about the economic impact of the COVID-19 pandemic on Australia so far…
During the COVID-19 crisis, the ANZ-Roy Morgan Consumer Confidence Index, Roy Morgan Business Confidence Index, and Inflation Expectations all hit new record lows and Unemployment reached its highest level since Roy Morgan began independently measuring it more than two decades ago.
Although the pandemic is still with us, and its effects are being felt throughout the nation, there has been an improvement in three of the four measures — Inflation Expectations being the exception.
Source: Roy Morgan Single Source, January 1998 – August 2020. Average weekly sample over the last 12 months=1,240.
On March 28/29, the ANZ-Roy Morgan Consumer Confidence Index bottomed out at 65.3 — lower even than during the Global Financial Crisis, and far below the 2019 average of 114.0.
But then boosted by the government’s economic support measures announced in late March and the flattening infection curve, Consumer Confidence rose steadily throughout April and May, recovering to 98.3 by May 30/31.
This rise continued through the first three weeks of June, to 97.5, but following a surge of new cases in Melbourne at the end of that month, it dropped to 93.0 by the end of June — 25.9 points lower than the same period a year earlier. It did not pass 93.0 nationally for the next 11 weeks.
However Consumer Confidence began to creep up through September and in research undertaken on September 19/20 it hit 93.5 nationally, although this is still 16.6pts lower than a year earlier and far below the long-term September average of 107.2.
The difference in the way the states have been impacted by COVID-19 is reflected in differences in their Consumer Confidence levels.
Perth spent most of July in positive territory above 100, with Adelaide joining it there in August. By August 25, with Victoria’s COVID numbers down, Consumer Confidence was slightly up in NSW and Victoria, and firmly up everywhere else.
By September 20, Consumer Confidence had was just below neutral in Perth at 99.3 and slightly lower in both Adelaide (96.3) and Brisbane (94.8). Consumer Confidence has also shown positive signs in the two larger cities with increases in late September in both Melbourne (91.7, up 5.9pts from a week earlier) and Sydney (90.3, up 3pts) as new cases of COVID-19 continued their decline.
Source: Roy Morgan Business Single Source, Dec 2010-Aug 2020. Average monthly sample over the last 12 months=1,160.
As early as March 15, 60% of businesses told us they had already been affected by COVID-19.
In April, the Roy Morgan Business Confidence Index plummeted to an all-time low of 76.9 — the 2019 average was 109.0.
Business Confidence bounced back to reach 95.0 in June nationally and 110.5 in WA and 100.7 in NSW.
However, the new outbreaks in Victoria and NSW caused an immediate dip with the national measure falling to only 84.3 in July.
Things were even worse in August when it dropped to 83.1 – the second-lowest monthly reading ever and a full 31.2pts lower than August 2019, and 30.6pts below the long-term August average of 113.7.
In both July and August, Public Administration & Defence and Transport, Postal & Warehousing were the only industries with Business Confidence in positive territory (above 100).
Tracking movement in the Sydney and Melbourne CBDs reveals just how hard-hit businesses in those cities, in particular, have been.
Mobile devices numbers revealed that the number of people coming into Sydney CBD in the first week of July was down to just 53% of what it had been in January and February.
Things were even worse in Melbourne where, in July, before the resumption of Stage 3 lockdown, CBD visits were down to 39% of pre-COVID levels.
By August 8, the first week of Melbourne’s Stage 4 lockdown, movement in its CBD plunged to a new record low of just 17% of pre-COVID times.
As of August 16, with Melbourne still in lockdown, it was even lower, at just 15% of pre-COVID levels.
That same week Sydney’s CBD visitation had lifted to just over 60% of pre-COVID levels. With West Australians feeling safe and secure behind their closed border, by August 16 movement in Perth CBD was up to 76% of pre-COVID levels.
The huge economic effects of COVID-19 are reflected in Roy Morgan’s Inflation Expectations index — a way of ‘reading the national room’ on feelings about the economy.
In February, before the pandemic really took hold in Australia, consumers on average expected 4% inflation over the next two years.
In June, Inflation Expectations hit a record low of 3.2% before rebounding to 3.4% in July.
But in August, with Melbourne in Stage 4 lockdown, repeated low-level outbreaks of COVID-19 in both New South Wales and Queensland, and changes to the JobKeeper wage subsidy and the JobSeeker coronavirus supplement just weeks away, the measure fell to 3.2% again, matching the record low set two months earlier.
This means it is down a significant 0.7% points on a year earlier.
The True Picture of Employment and Unemployment:
Two-thirds (67%) of the 15.5 million working Australians have had their employment impacted by COVID-19 as of August, with Victoria, NSW and Tasmania the hardest hit.
Impacts include working from home, reduced work hours, being stood down, and, in a minority of cases, having work hours increased. Individuals may have experienced more than one of these changes during the course of the pandemic so far.
As of July, 25% of the workforce, 3.9 million people, were working from home (down slightly from 28% in May); 21%, or 3.2 million people, had experienced reduced work hours; 9%, or over 1 million people, had been stood down for a period and/or had no work available (7%); 15%, or 2.3 million, people said their business in which they worked had slowed down or stopped completely; while 13% (2 million people) said they’d had an increase in work hours.
Nearly three-quarters of working Tasmanians (74%) have had a COVID-triggered change to their employment, compared to only 57% in South Australia and 62% in each of Western Australia and Queensland.
Roy Morgan has long measured both unemployment and under-employment and, for a number of methodological reasons we are happy to explain in detail, we are confident our figures are more accurate than those of the Australian Bureau of Statistics in this area.
In July, their figures showed unemployment was at 12.5% and a further 10.5% of the workforce was under-employed.
That’s 3.28 million Australians who were either looking for work or wanting more work, even before Melbourne went into Stage 4 lockdown.
In August this had improved – but only very slightly, with a total of 3.27 million Australians (22.8%) either unemployed or under-employed, an improvement of just 14,000 on July. In all, 13.8% of the workforce (1.98 million Australians) were unemployed, up by 194,000 on July due to both fewer jobs and more people looking for work.
There was some welcome good news in the fact that, while the number of those employed fell from July to August (down 89,000 to 12,376,000), more were working full-time (up 138,000 to 8,013,000) and fewer part-time (down 227,000 to 4,225,000).
But in addition to those unemployed, a further 1.29 million Australians (9% of the workforce) were under-employed in August– working part-time but looking for more work.
Compared to early March, an additional 1.1 million Australians are either unemployed or under-employed.
Victoria’s Second Wave: Measuring its Citizens’ Attitudes
By late May, the first wave of COVID-19 infections in Victoria was largely controlled: cases were in the single digits.
On June 6 no new cases were recorded in the state for the first time since March. Life was returning to normal and on June 9, 600,000 students returned to in-person attendance at schools across Victoria.
But within days the numbers of new cases recorded every 24 hours had begun to jump — 21 cases on June 17, 33 on June 25, 75 on June 29.
The dangerous second wave was building: on July 7, 191 new cases were reported.
The government response was swift: the following day Melbourne entered Stage 3 lockdown, and the NSW government closed its southern border.
But numbers continued to shoot up, as infections passed on days or weeks earlier became infectious.
In what would later be revealed to be the result of serious failures in the hotel quarantine system for returning travelers, July 30 brought a new daily peak of 723 cases, a record beaten less than a week later when 725 cases were reported on August 5.
By then Melbourne had already been in Stage 4 lockdown for three days, with Victoria’s Labour Premier Daniel Andrews citing health advice that it would take six months to stem the virus spread under Stage 3 lockdown.
Among other things, Stage 4 required people to wear a mask at all times in public, shop, and exercise (for no more than an hour a day) within 5km of home.
Partner visits were permitted but not other social gatherings or visits to family members in other households, and other than essential workers carrying a permit, residents were not permitted to leave home in the curfew hours of 8pm to 5am.
Countless media columns, radio shows, and podcasts, TV discussions, social media posts were given over to assertions about the perceived rights or wrongs of lockdown, with conservative commentators particularly vocal in decrying the restrictions and their flow-on effects.
Amid all the claims and counter-claims, one thing was missing: the voice of the people.
What does it all mean, and where to from here?
Roy Morgan CEO Michele Levine says:
“As the pandemic has continued month after month we have seen an erosion of the ‘we’re all in this together’ assurances that featured strongly in its early stages. It is clear that just like the social and psychological impacts, the economic impacts of COVID-19 have not been felt equally. We can see the differences across the states, between different kinds of industries, and on individuals of different ages and with different levels of employment security and experience.
“The second wave of the crisis, since June, has been far more deadly than the first, but has been heavily concentrated in Victoria rather than felt equally around the nation. However, there have been significant spill over effects into NSW, and the renewed outbreak has led other States such as Tasmania, Queensland, and Western Australia to keep their borders closed.
“Our Consumer Confidence, Business Confidence and Inflation Expectation measures all show the impact of the strain the pandemic has put on our society, but perhaps the starkest and easiest to grasp figures are those relating to employment: 10.4 million working Australians have had their employment changed by the impact of the Coronavirus Crisis while 3.5 million are looking for work or looking for more work
“The Federal Government responded to the second wave by extending JobKeeper in an altered form and at lower rates until the end of March 2021 and extending a decreased JobSeeker supplement payment until the end of this year. But this still leaves millions of Australians and many businesses facing an uncertain future.
“When the JobKeeper wage subsidy ends in April 2021, as it is currently scheduled to, many of the employees who have had a changed employment situation due to the pandemic but have held on to their jobs in some form may well find themselves out of work as their employer adjusts to the economic reality without an ongoing wage subsidy.
“The Federal Budget set to be delivered by Treasurer Josh Frydenberg in early October, just a few weeks away, must provide a clear roadmap for the Australian economy to navigate the next few years.
“None of us can honestly say we know what a post-pandemic ‘new normal’ will look like, but it’s clear this virus has dealt us a blow from which we will only recover with a combination of steady leadership, far-sighted strategy, time and an acknowledgement that we may not all be affected equally but we will all need to work together to get through this.
The Stage 4 lockdown which commenced in Victoria in the first week of August in response to a second wave of COVID-19 infections was the subject of a torrent of commentary and diametrically opposed claims about how Victorians were feeling. There was a plethora of opinion about how the people of Victoria were feeling, but a dearth of fact. We filled the gap by commencing weekly surveys with a representative sample of people across the state. We saw some differences across age groups, location and political allegiance, but the most notable finding was how united people were in their support for measures designed to stop the virus in its tracks. It demonstrates the fundamental importance of data over guesswork, the principle on which Roy Morgan was built.
“As we go forward Employment, Consumer Confidence and Business Confidence are the most critical measures signalling economic recovery. Roy Morgan will continue to do the important work of tracking this data and making the results publicly available, as we have done for 80 years. We’re here for business and the nation as a whole, just as we have always been.”
Source: Roy Morgan Single Source: Interviews an average of 4,400 Australians per month aged 14+ (April 2010–August 2020).
Roy Morgan & ABS Unemployment & Under-employment: January 2019 – August 2020
Source: Roy Morgan Single Source, January 2019 – August 2020, Average monthly sample size, n=4,400. Base: Australians 14+.
Impact of Coronavirus on Employment by State (July 2020)
Source: Roy Morgan multi-mode survey of Australians conducted during July 2020, n=3,863.
Base: Working Australians aged 14+. Respondents could nominate multiple employment changes
Victorian Citizens on State Government Response to the Second Wave
Week 1 (August 25-26, 2020): Should Melbourne residents now be able to visit the homes of their immediate families? By City/Country & Age
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