Daily Commentary BY THE CURVE TEAM –

Business Recovery Struggles

9th of September, 2020

The latest Business Survey for August indicated that there are struggles ahead for businesses despite most of the economy reopening.

One bright spot was business confidence had improved to -8 from -14. However, this still leaves confidence at very low levels and the rest of the survey showed worsening conditions.

Business conditions for August fell back to -6 after rising to 0 in July. The industries with the largest falls were mining, construction and recreation & personal services.

The worsening conditions were felt in all states except NSW. Given lockdown measures in all states except Victoria have been unwound since March and April, the broad-based fall does not bode well for a robust economic recovery.

Also concerning was the fall in the employment index from -2 to -13. Given the fall in consumption over Q2 accounted for the majority of the fall in GDP, a negative outlook for employment will only exacerbate the lack of consumption in the economy.

Payrolls data released yesterday gave a more positive indication for employment, with payrolls up 0.6% for the week to August 22. It still leaves payrolls 0.4% lower over the 4 weeks to August 22.

Half the jobs lost at the beginning of the pandemic have now been recovered, but this counts those on JobKeeper as employed. Some 3.4 million receive JobKeeper payments, and with amendments to eligibility due at the end of the month, we will get a better gauge on state if the economy without government assistance.

Josh Stewart

Client Relationship Manager