The economic damaged caused by a record number of covid-19 cases being recorded across Australia is negatively impacting workers in pretty much every industry. Australians businesses are struggling to keep up with the number of workers being told to isolate after testing positive to covid-19 or after being listed as a close contact of a confirmed case.
The huge amounts of staff shortages and positive cases in the community are also scaring customers away from wanting to spend their money on airlines, entertainment and hospitality venues. All of these sectors are struggling now so even more after they already struggled significantly during the implementation of several lockdowns over the past two years.
“Essentially small businesses are in a lockdown. There is little support out there to help them keep their doors open,” says Alexi Boyd, the head of the Council of Small Business Organisations.
Labour shortages and caution about being in public places have stifled household spending, Australia and New Zealand Banking Group said in a research note, with spending in early January resembling lockdown conditions in Sydney and Melbourne, Australia’s largest cities.
Before the Omicron outbreak erupted during the Christmas period, the economy had been making a surprisingly strong recovery. In November, employment levels rose far faster than expected as coronavirus lockdowns were lifted, and retail sales also surged for the second month in a row.
As a result of the huge pressure being placed on supply chains, Coles reintroduced purchase limits on toilet paper, some meat products and medicines for customers purchasing items from their supermarkets.
Prime Minister Scott Morrison says that it is “understandable” that the Omicron variant was affecting the economy, but he was hopeful of a strong rebound.
“At this stage, it is a bit too early to tell (the economic impact), but there’s obviously been a dampening impact on consumer demand – I think that’s fairly obvious and understandable. But what we’ve seen so many times is that when you, it’s a bit like when you’ve come out of lockdown, you see the economy surge back quite quickly,” says Australian Prime Minister Scott Morrison.
Scott Morrison says that businesses enduring workforce shortages and disruptions to supply chains were experiencing “a tough time”.
“As the case numbers continue to rise, the volume of cases will of course have an inevitable impact on the workforce. This is an incredibly tough time on business. There aren’t lockdowns but there are many people obviously impacted by being close contacts or people being wary, or those indeed who have Covid themselves,” says Australian Prime Minister Scott Morrison.
Rise In Covid-19 Cases Triggers A Decrease In Early Year Spending
ANZ is reporting a huge decrease in early year spending across the country when compared to previous years. The caution in spending is a result of the significant spread of the Omicron variant of covid-19 especially in NSW where spending in the week to 2 January was 25 per cent lower year-on-year.
However, ANZ Research senior economist Adelaide Timbrell emphasises the recent drop is nowhere near lockdown levels.
“I don’t think it’s cause for too much concern for the 2022 outlook of spending yet. The Omicron caution is something that’s going to develop and change quickly. The good signs for spending in 2022 are that people are shifting their spending online rather than just not spending altogether, particularly for discretionary categories like non-food retailing and dining,” says ANZ Research senior economist Adelaide Timbrell.
“We’ve also seen that in the 2021 retail data that Victorians actually had a much smaller impact from Delta lockdowns compared to people in NSW and the ACT, and I think that speaks to the fact that when people – whether it’s businesses or consumers – have more experience with lockdowns, it tends to mean that they have a smaller spending impact each time,” continued Ms. Timbrell.
The author of ANZ’s spending data wrap-up adds Victoria’s spending was down 19 percent and Queensland’s was down 17 percent, although the rest of the country was not hit as badly.
“But if this caution does continue and we do see people stay at home more due to Omicron or not spend as much on hospitality and other retailing, that may be something that has an impact. It is just too early to tell right now. There’s a big difference between staying home for New Year’s and an economic crash, and I think we’ve just got to really remember that when we look at this data,” says Adelaide Timbrell.