Finance Work ABS data points to two-speed economic recovery

ABS data points to two-speed economic recovery

Victorian businesses shed 2 per cent of payroll jobs in the fortnight to August 22, according to ABS data. Photo: TND
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New data shows the Australian economy is experiencing a two-speed recovery, with payroll jobs in the month to August 22 falling by 2 per cent in Victoria and rising by 0.1 per cent in the rest of Australia.

Data released by the Australian Bureau of Statistics on Tuesday shows there are 7.9 per cent fewer payroll jobs in locked-down Victoria now than in mid-March, but 2.9 per cent fewer in the rest of the country.

As Victoria battled through the first few weeks of Stage 4 restrictions, businesses in the state shed 0.7 per cent of payroll jobs between August 8 and August 22.

Although that marked an improvement on the 2.8 per cent fall between July 25 and August 8, all other states reported a net increase in jobs.

Tasmania led the way, boosting payroll jobs by 1.1 per cent in the two weeks to August 22, while South Australia (+1.1 per cent), NSW (+0.7 per cent) and Western Australia (+0.7 per cent) also posted reasonable growth.

But in a sign the recovery might be short-lived, NAB’s monthly business survey found business conditions deteriorated across all states except NSW in August – dragging down the national index by 6 points to -6.

Source: NAB Monthly Business Survey, August 2020

NAB’s survey found all industries remain below their long-run averages despite a “notable rebound” in every sector other than construction since April.

And even though confidence rose by 6 points over the month to -8, NAB chief economist Alan Oster said the results showed the jobs market would get worse before it got better.

“The weakness was primarily driven by a deterioration in the employment index – suggesting that while the economy has generally begun to open up, the labour market is still weakening,” Mr Oster said.

And not just in locked-down Victoria.

Source: NAB Monthly Business Survey, August 2020

“The deterioration in conditions was broad-based across the states, with sharp declines in Queensland, Tasmania and South Australia,” Mr Oster said.

“Victoria also saw a moderate decline, which we had feared would be worse given Melbourne’s Stage 4 restrictions.

“The fact that the other states have seen a pull-back suggests that the virus continues to pose a risk everywhere, not just states with significant containment measures in place.”

The survey comes after Treasury released analysis showing more than half of the 1.3 million Australians who lost their jobs or were stood down at the start of the crisis had returned to some form of work by July.

Source: NAB Monthly Business Survey, August 2020

Treasurer Josh Frydenberg said at the time that the figures provided cause for optimism, though he also warned that another 400,000 people would lose their jobs as a result of the tougher lockdown in Victoria.

The recent extension of Stage 4 restrictions in Victoria suggests that that estimate is now optimistic at best and irrelevant at worst.

“Given the sheer magnitude of the fall in activity in [the second quarter] and the subsequent lockdowns in Victoria, it is likely we will see a protracted recovery and a rise in the unemployment rate before it gets better,” Mr Oster said.

“Policy makers have provided unprecedented support – but we think there will need to be more. This would help businesses and the economy recover more quickly and the focus can again return to growth.”