Health Of the Australian Economy As Christmas Approaches

Highlights

• Greg Hunt, the minister for health and aged care mentioned 24.8 million vaccinations have been done by far in Australia.
• The country's GDP grew by 0.7% in the quarter ended June.
• The number of employed people saw a month-on-month dip of 146300, a 1.1% dip since July.

The tiny Covid- 19 virus has wreaked havoc on the health of humans and economies across the globe. Australia too is no exception. So let us see what is happening to the health of the Australian economy after the recent surge in cases.

Status of the second quarter

According to the Australian Bureau of Statistics, the country's GDP grew by 0.7% in the quarter ended June, though the numbers were better at 1.9% at the start of the year. The government’s response continued into the March quarter, with the JobKeeper payments, as subsidies for businesses, amounting to AU$6.4 billion in the March quarter, which was a massive dip from the previous quarter's AU$12 billion. The terms of trade were recorded at 7% last quarter and had hit the highest level in the history. The country's economy manages to race back close to the pre-pandemic size, with the rising prices of mining commodities exports contributing to the quarterly gain.

Related Reads: Glum around Australian GDP numbers- recession or rebound in the offing?

Latest statistics on the cases (data as per 21/9/2021)

As per the latest statistics from the Department of Health, as on 24 September 2021 (8:10 PM AEST), there are a total of 93,943 cases in Australia, out of which 56,988 are in NSW, and 31,679 cases are in Victoria. The highest number of cases have been in the age group to 20 to 29, with the number of males being greater than the number of females. From the time of first case, the highest number of deaths have been recorded among the age of 80 plus years.

Health Of the Australian Economy As Christmas Approaches

Recent updates on vaccinations

According to Department of Health, 26,130,313 vaccinations have been done by far in Australia as of 23 September 2021. 74.8% of people over the age of 16 have had at least one dose, while 50.1% of people over the age of 16 are fully vaccinated. 

Labour market conditions in August

As per recent statistics for August, unemployment rate dipped to 4.5% while the participation rate dipped by 0.8 points to 65.2%. The number of employed people saw a month-on-month dip of 146,300, a 1.1% dip since July. The youth unemployment rate too rose by 0.5 pts to 10.7%. The employment to population ratio too dipped by 0.7 pts to 62.2%. The number of hours worked also plunged by 66 million hours during the month. The participation rate declined 0.7 pts for men and 0.9pts for women.

The dip in the participation rates in NSW was due to the lockdowns. Similar downtrends were seen in Victoria during last year's second wave of the virus. The decline in the hours worked was a clear impact of lower work hours or no work, and not just job losses.

Christmas- the reason for hope

Sources say that the number of advertised short-term jobs has increased by 55% year over year. According to the Australian Retailer's Association projections, Christmas spending will be close to $11 billion.

Coles and Woolworths, for example, are on a hiring frenzy as they prepare for an increase in demand. The former plans to add 7000 jobs, while the latter has posted 1000 job openings. These figures are projected to rise as we approach the holiday season when areas like NSW and Victoria will be free of lockdowns. The numbers are driving the optimistic forecasts.

The national postal service's August deliveries were higher than those of the previous year's Christmas season. Moreover, in August, the country saw a 20% growth in internet buying from the previous month. To avoid shortages, businesses are stocking up, and some have even established new warehouses for the purpose. Manufacturers, on the other hand, continue to face shortages.

For instance, the global semiconductor market is experiencing supply limitations. Geopolitical tensions and the rising demand for silicon chips in many industries have contributed to the supply chain disruption. The demand spike began in 2020 when the COVID-19 outbreak prompted a worldwide shopping frenzy on electronic devices and manufacturing closures strained supplies.

Related Read: Global semiconductor shortage may stretch to 2023

Bottom Line

According to experts, the current quarter is expected to witness weak GDP estimates, with recovery coming only towards the end of the year. It will be interesting to observe how the runway to festival season unfolds, with government vaccination mandates becoming more rigorous, corporations attempting to gain customer trust, and workers rejecting changes like mandatory vaccination deadlines. It's a nail-biting wait for the running quarter's performance, given the plunging GDP growth numbers since the last few quarters.