Daily Commentary BY THE CURVE TEAM –

JobKeeper 2.0 Amended

7th of August, 2020

The economic damage from Victorian lockdowns has led the government to amend JobKeeper 2.0.

The initial JobKeeper 2.0 required a fall in revenue of 30% from the same period last year in the June and September quarter to be eligible for the payments from October to December. To be eligible for the payments from January to March in 2021 you would need to demonstrate a fall in revenue of 30% against the same period last year for the three prior quarters.

These have now been slightly relaxed. Businesses will now only need to demonstrate a fall in revenue of 30% or more in the September quarter. Although still stringent, some 40% of Victorian businesses are set to be eligible for the scheme.

The announcement comes as economic forecasts are being updated in wake of the severe hit to economic from the second wave in Victoria. Treasury has increased its estimate for unemployment to peak at 10% rather than 9.25%, which aligns with the RBA’s forecast. Once JobKeeper 2.0 begins from October and some businesses stop receiving payments unemployment is expected to go to 13%.

In contrast to yesterday’s US ISM Services Index read, which indicated businesses were still reluctant to hire despite rising activity, US employment data beat expectations. There were 1.186 million initial jobless claims where 1.4 million were expected.

Although better than expected, it still makes for grim reading. Initial claims are people who have recently lost their job. This week’s number was the lowest since mid-March, which implies businesses have been and are still letting off employees in vast numbers.

Today the Statement of Monetary Policy is released. This will provide an update on the outlook on the economy.

Josh Stewart

Client Relationship Manager