Australia & COVID-19 Tracing the Economic Impact Roy Morgan Update: March 2021

After 2020’s turmoil, the Australian economy is now firing on most cylinders — but unemployment and under-employment remain a serious concern.

This document contains:

1. What does it all mean and where to from here? Michele Levine’s expert analysis
2. An overview examining the data in detail
3. Australia’s COVID-19 timeline

In early 2021, what does it all mean, and where to from here?

Expert analysis from Roy Morgan CEO Michele Levine:

An overview examining the data in detail:

Government and business turn to Roy Morgan for key measures on Consumer Confidence, Business Confidence, Inflation Expectations and the true picture on Unemployment and Under-employment. Here is what those measures and other revealing data on CBD movements and mortgage stress tell us about the economic impact of the COVID-19 pandemic and Australia’s recovery from the past turbulent year.

As the COVID-19 crisis unfolded in the first half of 2020, the ANZ-Roy Morgan Consumer Confidence Index, Roy Morgan Business Confidence Index and Inflation Expectations all hit new record lows and Unemployment reached its highest level since Roy Morgan began independently measuring it more than two decades ago. 

Both Confidence measures have recovered strongly. The latest figures show:

Consumer Confidence at 111.9 (as of Mar 6-7, 2021), a huge increase on its March 2020 low of 65.3 and significantly higher than the equivalent period a year earlier, just before COVID made its full impact felt, when it was 111.4 (Mar 7-8, 2020).

ANZ-Roy Morgan Consumer Confidence Rating: 1998-2021

Source: Roy Morgan Single Source, January 1998 – February 2021. Average weekly sample over the last 12 months=1,487.

Business Confidence at 120.8 in February 2021, up from its April 2020 low of 76.9 and 16.2 points higher than it was in February 2020 (104.6). The latest figure is an increase of 0.2% on the previous month, and the index is 7.3pts above the long-term average of 113.5.

Inflation Expectations, which represent a snapshot of how consumers think the economy will perform in the short- to mid-term, also recovered although not as strongly. The latest figures show:

Roy Morgan Business Confidence Rating: 2010-2021

Source: Roy Morgan Business Single Source, Dec 2010-Sept 2020. Average monthly sample over the last 12 months=1,306.

Inflation Expectations at 3.7% in February, up from the record low of 3.2% reached in June 2020 and again in August, but still 0.3% points below the level a year earlier (4.0% in February 2020).

Inflation Expectations Index long-term trend – Expected Annual Inflation in next 2 years 

Source: Roy Morgan Single Source: Interviews an average of 4,500 Australians per month aged 14+ (Apr. 2010-Feb. 2021).

Meanwhile, the message on Unemployment and Under-employment is mixed. 

Unemployment was at 13.2% of the workforce (1.93 million people) in February 2021, the highest rate since August 2020. Unemployment increased sharply in February as we approach the end of the JobKeeper wage subsidy and the JobSeeker Coronavirus supplement. 

Although employment levels in February have nearly returned to their levels pre-pandemic, there has been a large influx of new workers into the workforce which means unemployment today is over 900,000 higher than it was in early March 2020 – immediately prior to the first lockdown.

The age group with the highest level of unemployment is 18-24 year olds, young people trying to get a foothold in the working world. Unemployment across this entire age group is 17%, compared to only 7% for 35-49 year olds, the group with the lowest rate.

Under-employment was at 7.8% of the workforce in February 2021, meaning 1.14 million people were seeking more work than was available to them. Under-employment has not fluctuated as significantly as unemployment over the last year and is now around the same level it was immediately prior to COVID-19.

The bottom line is that in February 2021, 3.07 million Australians, or 21.0% of the workforce, were either unemployed or under-employed. This is over 900,000 higher than the number in early March 2020, before the nationwide lockdown – and almost all of this increase has been in unemployed Australians.

In addition, latest Australian Taxation Office figures show that in December 2020, nationally 1.54 million people were still receiving the reduced JobKeeper 2.0 employment subsidy. This represents 13% of the pre-pandemic workforce and is a decrease of more than half the 3.6 million people (29% of the pre-pandemic workforce) who were receiving the full subsidy in the September quarter.

Roy Morgan & ABS Unemployment & Under-employment: January 2019 – February 2021

Source: Roy Morgan Single Source, Jan. 2019 – Feb. 2021, Average monthly sample size, n=5,000. Base: Australians 14+.

However the percentage of Victorian workers who remained on JobKeeper in the December quarter was the highest in the country, at 18%, reflecting the state’s much longer periods of lockdown. Next highest was NSW, on 12%, with all the other states and territories on 10% or less. The Northern Territory had the lowest percentage, with just 5% of its pre-pandemic workforce still receiving the JobKeeper subsidy in the December 2020 quarter. 

The subsidy is scheduled to end in just a few weeks, on March 28. Reserve Bank Governor Philip Lowe has said this will result in “some job shedding” which could cause “a month or two” of rises, or slower falls, in the unemployment rate. 

Note: Roy Morgan’s figures on Unemployment and Under-employment are higher than those of the ABS (which had them at 6.4% and 8.1%, respectively, in January). Among other things, these ABS figures count 103,000 Australians who worked zero hours for ‘economic reasons’ as employed.

Much will depend on whether CBD businesses re-open and this in turn still depends on human and business behaviour. Although the confidence indicators are positive the return to work and shopping in CBDs around Australia is slow.

CBD Movement:

Tracking movement in Australia’s capital cities is an important measure of the effects of the COVID-19 pandemic on businesses. Roy Morgan partners with leading technology innovator UberMedia to aggregate data from tens of thousands of mobile devices in order to provide this data which shows all of our capital CBDs have been affected, with Melbourne and Sydney particularly hard hit. 

Our analysis of data from Australia’s Capital City CBDs shows during the first half of January 2021 movement levels were still well down on the same period a year ago – by as much as 72% in the Melbourne CBD and 66% in Sydney CBD. It’s important to note that for much of this period the Northern Beaches local council area of Sydney was under stay-at-home lockdown. In addition, both cities had continued restrictions in this time, including mandatory mask-wearing on public transport and other specified locations, as well as restrictions on the size of gatherings allowed in certain venues. 

Even so, these decreases in movement are greater even than those of mid-2020. In the first week of July 2020, movement in Sydney’s CBD was down 47% compared to January and February that year, while in Melbourne it was down 61% (this was before the city’s resumption of Stage 3 lockdown).

Queensland’s capital also went into a city-wide but brief lockdown early in the new year, from January 8-10, 2021. Despite this, movement in the Brisbane CBD in the first half of January was less affected than its southern neighbours, down 55% on the same period a year earlier. This is a decline compared to mid-October 2020, when the movement level was 66% of what it had been in January and February 2020.

The two best performers when it comes to returning to a ‘pre-COVID normal’ are the Perth CBD, with early January 2021 movement down only 31% on a year earlier, and the Adelaide CBD, where movement was down only 35%. Yet even these two had lower movement levels in early January 2021 than they’d had in mid-October 2020, after which both cities experienced new lockdowns, Adelaide in late November 2020 and Perth in early 2021. Adelaide’s early January 2021 CBD movement was down by 22% compared to January and February 2020, while movement in Perth was down by 26%.

Roy Morgan-Uber Media Analysis of Movement Data in 2020-21 – Sydney CBD

Source: Roy Morgan collaboration with UberMedia who provide anonymous aggregated insights using mobile location data. Note: Movement data for Sydney CBD excludes residents of the Sydney CBD.

Roy Morgan-Uber Media Analysis of Movement Data in 2020-21 – Melbourne CBD

Source: Roy Morgan collaboration with UberMedia who provide anonymous aggregated insights using mobile location data. Note: Movement data for Melbourne CBD excludes residents of the Melbourne CBD.

Roy Morgan-Uber Media Analysis of Movement Data in 2020-21 – Adelaide CBD

Source: Roy Morgan collaboration with UberMedia who provide anonymous aggregated insights using mobile location data. Note: Movement data for Adelaide CBD excludes residents of the Adelaide CBD.

Public transport use has also experienced significant decline as a result of the pandemic. Newly released Roy Morgan research found over 7.8 million Australians aged 14+ (37%) used public transport during the December quarter 2020. This is up over 950,000 from the September quarter 2020 when just under 6.9 million (33%) were using public transport – a low reached during Melbourne’s long second lockdown and significant restrictions on people’s movement in Sydney. It makes the first increase in public transport usage across the country since the pandemic began in March 2020. Nonetheless, public transport usage in the December quarter 2020 was down by almost 4 million people (33.5%) on its pre-COVID-19 pandemic levels of 11.8 million people using it the December quarter 2019.

Public transport use in Australia from 2016 – 2020

Source: Roy Morgan Single Source, Jan. 2016-Dec. 2020, quarterly average sample n = 13,143. Base: Australians aged 14+.

Mortgage Stress:

In the three months to October 2019, with the world blissfully unaware of the changes to come, mortgage stress was at near record lows — our research found 723,000 mortgage holders were considered ‘At Risk’. (Mortgage holders are considered ‘At Risk’ if their mortgage repayments are greater than a certain percentage of household income – depending on income and spending, and ‘Extremely at Risk’ if even the ‘interest only’ mortgage option is over a certain proportion of household income.)

Initially, the enormous loss of income resulting from the national lockdown seemed likely to send mortgage stress levels skyrocketing, but the financial support quickly provided by the federal government and moves by banks and other lenders to support borrowers with repayment ‘holidays’ quelled those fears. In fact the number of mortgage holders considered ‘At Risk’ dropped to 668,000 between July and September 2020. 

However between September and November 2020, the number considered ‘At Risk’ or mortgage stress rose to 783,000, or one fifth of all mortgage holders. With most mortgage ‘holidays’ finished and government support such as JobKeeper almost at an end, this number is likely to rise again. 

Mortgage stress is closely tied to unemployment. As Michele Levine notes in her explanatory comments below, “Mortgage stress is inextricably linked to unemployment: the single biggest driver of increased mortgage stress is the reduction in income resulting from job loss — that causes an immediate jump into a risk category.”

Mortgage Stress – Owner-Occupied Mortgage-Holders

Source: Roy Morgan Single Source (Australia), average interviews per 3 month period April 2007 – November 2020, n=2,673. Base: Australians 14+ with owner occupied home loan.

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How events unfolded – Australia’s COVID-19 timeline:

• On January 22 Australia had its first confirmed case of COVID-19.
• On March 19 Australia closed international borders.
• On March 22 the JobSeeker payment was doubled for six months, part of a $66 billion stimulus package which also allowed those under financial duress to draw down their superannuation.
• On March 23 cafes, restaurants, pubs and clubs around the country closed, except for takeaway.
• On March 28 a daily diagnosis peak was reached, with 469 new cases confirmed.
• On March 30 the $130 billion JobKeeper package was announced, to run to September 27.
• On April 5 Western Australia closed its borders to the rest of the country.
• On July 8, a day after Victoria recorded 191 new COVID-19 cases in 24 hours, its highest jump to that point, Melbourne entered Stage 3 lockdown and the NSW government closed its border with the southern state.
• On July 21 details of amended JobSeeker and JobKeeper packages were released, confirming the JobSeeker Coronavirus Supplement would run beyond its original end date of the end of September, albeit in a two-tier, two-stage tapering arrangement. 
• On August 2 Victorian Premier Daniel Andrews announced Melbourne would enter a Stage 4 lockdown that week, running until at least mid-September, to combat a renewed outbreak.
• On August 4 Victoria reported 687 new cases and by August 7 had 6,774 active cases. With the state in lockdown to control the spread, this would prove to be the peak of its second wave.
• On August 8 the Queensland government implemented a ‘hard border closure’, adding NSW and the ACT to the entry ban which already applied to people from Victoria.
• On August 17 NSW Premier Gladys Berejiklian apologised “unreservedly” for mistakes made by NSW Health in allowing infected Ruby Princess cruise ship passengers to disembark and travel within NSW, interstate and overseas. 
• On September 6 Victorian Premier Daniel Andrews released details of the ‘roadmap’ for easing restrictions across the state, contingent on cases continuing to drop.
• On September 28 the JobKeeper payment dropped by at least $300 per fortnight (more if fewer than 20 hours were being worked per fortnight).
• On September 29 WA Premier Mark McGowan said he would not “unnecessarily rush” to lift the state’s hard border closure, with the state’s Chief Health Officer advising the WA government that the step should only be taken following 28 days of zero community transmission in all states and territories.
• On October 6 the federal government delivered its 2020-21 Budget, delayed from the usual May release because of the pandemic. Having forecast a $6.1 billion surplus pre-pandemic, the budget was revised to show an expected $213.7 billion deficit. 
• From October 12 a phased return to classroom learning began for students across Victoria and on October 18 lockdown restrictions were further eased throughout the state. 
• On October 23 Prime Minister Scott Morrison said with the exception of WA, the National Cabinet had “agreed in principle on a framework” for reopening Australia’s internal borders “by Christmas”.
• On October 26, Victoria achieved what was dubbed a ‘donut day’: 0 new cases and 0 deaths over the previous 24 hours — the first time in the 139 days since June 9 there were zero new daily cases.
• Also on October 26, Tasmania topped CommSec’s quarterly State of the States economic performance league ladder for the second quarter in a row. As of that date, Tasmania had recorded 75 days without a new COVID-19 case, second only to the Northern Territory’s 85 days. Tasmania last topped the state’s economic ladder in 2009.
• On October 27, at 11.59pm, almost 16 weeks after Melbourne went into Stage 3 lockdown, the city moved from ‘stay home’ restrictions to ‘stay safe’ conditions, with bars and eateries reopening, sport recommencing and social gatherings allowed. 
• On November 1 Australia recorded zero cases of COVID-19 acquired locally, ie through community transmission, for the first time since June 9.
• On November 8, at 11.59pm, after four months the metaphorical ‘ring of steel’ separating Melbourne from regional Victoria was lifted. 
• On November 16 the South Australian government reintroduced a range of restrictions including closing gyms and lowering attendance at funerals, in response to a new localised outbreak. The restrictions were lifted five days later after it was discovered a case of suspected casual transmission had actually resulted from close contact. 
• On November 24 Victoria recorded no active COVID-19 cases in the state for the first time since February 21.
• On December 20 70,000 residents in Sydney’s Northern Beaches entered what would become a three-week lockdown in response to a COVID-19 outbreak known as the ‘Avalon cluster’ that eventually involved 151 diagnoses.
• On December 31, the Early Release Superannuation Scheme closed. The Australian Prudential Regulation Authority subsequently released data showing that 4.8 million applications for early release of funds were approved, totalling $36.4 billion. The average payment amount across the two periods when applications were permitted was $7,638. According to the Australian Institute of Superannuation Trustees, “Nearly one million young workers under the age of 35” either closed their super accounts or had less than $1,000 remaining after accessing the scheme and “over 73,000 Australians lost insurance cover linked to their account”.
• On January 2 the NSW government made face masks mandatory in supermarkets, places of worship and on public transport in Greater Sydney, the Central Coast and Wollongong. Mask use had remained mandatory in such settings in Victoria past the end of its lockdown. 
• On January 4 the JobKeeper payment dropped again, this time by at least $200 per fortnight (more if fewer than 20 hours were being worked per fortnight).
• On January 8, at a meeting called urgently in response to identification of the new ‘UK strain’ of COVID-19 in quarantining returned travellers, the National Cabinet halved the number of international passengers allowed into Australia via NSW, Qld and WA, made masks mandatory for domestic as well as international air passengers and introduced a requirement for international travellers to return a negative test before being allowed to fly. (International traveller limits returned to previous levels in NSW and Qld on February 15.)
• Also on January 8 Greater Brisbane entered a three-day lockdown after a quarantine hotel cleaner was diagnosed with the ‘UK strain’ of COVID-19.
• On January 15 the first of 15 charter flights bringing tennis players and support staff to Australia to compete in the Australian Open arrived in Melbourne, with all passengers going straight into a mandatory two-week hotel quarantine.
• On January 31, just as the new school year was about to begin, Perth and the Peel and South West regions of Western Australia went into a five-day lockdown after a quarantine hotel security guard contracted COVID-19, ending the state’s 10-month run without community transmission. 
• On February 3 restrictions including mandatory masks indoors and lowered caps on gatherings in homes were reintroduced in Victoria, in response to an Australian Open quarantine support worker testing positive for COVID-19.    
• On February 10 the Melbourne airport Holiday Inn was evacuated after quarantine workers there were found to have been infected with COVID-19. The cluster would grow to 22 people by February 19. 
• On February 12, in response to the Holiday Inn cluster, Victoria entered a five-day statewide lockdown. The Australian Open was permitted to continue, without spectators. 
• On February 21 the first doses of COVID-19 vaccine were administered in Australia. Prime Minister Scott Morrison was among a group of 12 recipients of the Pfizer vaccine at a publicity event. Rollout of the vaccine to frontline workers around the country began the following day
• On February 28 the federal Minister for Health and Aged Care said that in the first four days of the vaccine roll-out, “almost 30,000 Australians had been vaccinated, including 8,110 aged care and disability residents throughout 117 care facilities”.
• On March 2 the federal government announced Australia’s international borders would remain closed until at least June 17 2021, three months later than the March 17 date for reopening which was originally planned when borders were closed 12 months earlier. Almost 40,000 Australians are currently overseas but registered with the Department of Foreign Affairs and Trade as wanting to return home as soon as possible. 
• On March 3 the Australian Bureau of Statistics released data showing rose 3.1% in the December quarter, as COVID-19 related restrictions continued to ease. This followed a 3.4% rise in the September quarter 2020. The end result for 2020 as a whole was that Australia’s economy shrank by 1.1%.
• On March 5 Federal Health Department secretary Brendan Murphy announced the CSL facility in Melbourne was on track to deliver the first batch of doses of the AstraZeneca vaccine in the week beginning on March 22. The announcement followed news that Italy had blocked the export of 250,000 doses of the same vaccine to Australia on the grounds that Australia was ‘not vulnerable’ to COVID-19 given the low number of cases in country.
• As of March 10, the federal Department of Health reported Australia had 110 active COVID-19 cases, with none acquired locally in the previous seven days, and there had been 909 deaths from the disease since the pandemic began, from a total of 29,061 cases nationally.