Consumer confidence has slumped due to the rapid spread of the COVID-19 Omicron variant and the immense strain this has put on testing facilities, as retail spending slowed in the first few weeks of the year.
Prior to the Omicron outbreak, where tens of thousands of Australians were infected each day and fatalities spiked, the economy was rebounding smartly after last year’s Delta strain lockdowns.
Data released on Tuesday showed the employment market was recovering late last year, while the easing of border restrictions on November 1 saw a burst of international travel, albeit still well down on pre-pandemic levels.
But the more up to date ANZ-Roy Morgan consumer confidence index — a guide to future household spending — tumbled 7.6 per cent in the past week to its lowest level since October 2020 at 97.9 points.
ANZ head of Australian economics David Plank noted confidence is even lower than during last year’s Delta outbreak which put half the population in lockdown.
“Consumer confidence readings are usually positive during the month of January and the level of 97.9 is the weakest January result since 1992, when the Australian economy was experiencing sharply rising unemployment,” Mr Plank said.
“The result highlights that concerns about COVID have the potential to significantly impact the economy if they linger.”
Subindices of the confidence survey for views on the economy and personal finances all fell, with 19 per cent expecting to be financially “worse off” this time next year, the highest level since September 2020.
Separate ANZ data showed retail spending — as observed by the bank through transactions — fell 27 per cent in first half of January compared to the first half of December, when declines have usually been between 17 and 21 per cent in previous years during this period.
Meanwhile, the Australian Bureau of Statistics said there were 197,000 overseas arrivals in December and 229,000 departures, the highest volumes since international restrictions were introduced in March 2020.
From November 1 fully vaccinated Australian citizens and permanent residents were allowed to travel to and from Australia without an exemption.
But ABS director of migration statistics Jenny Dobak said there are still far fewer border crossings than before the pandemic.
“In December 2019 there were 1.9 million overseas arrivals and 2.2 million overseas departures, 10 times larger than December 2021 volumes,” she said.
New figures released by business and employment online operator LinkedIn showed hiring on average as of the December quarter was 16 per cent higher over the year compared to the same pre-COVID period.
This came as lockdowns were gradually lifted in NSW, Victoria and the ACT.
“However, there remain risks to the recovery given the emergence of the Omicron variant,” LinkedIn warned.
Even so, it expects the labour market to tighten in coming months with job seekers in the driver’s seat and in a better position to negotiate employment terms.
Separately, figures from employment platform SEEK showed job advertisements declined 3.2 per cent in December, but were still 39 per cent higher than a year earlier.
“Looking at the first 10 days of 2022, there have been more jobs posted to the site than in the same period in the past three years,” SEEK’s sales and service director Stephen Tuffley said.
The Australian Bureau of Statistics will release labour force figures for December on Thursday.