Recovery tempered by second wave impacts – the September quarter 2020

The Australian Statistician's Analytical Series provides insights into topical economic and/or social developments captured in ABS data

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Released
14/12/2020

This article brings together key ABS economic statistics to provide a summary of the Australian economy during the September quarter 2020. The economy is looked at from the perspectives of government policy responses (section 2), aggregate national statistics (section 3), industries (section 4) and second wave impacts in Victoria (section 5).

As with the March quarter and June quarter articles, it highlights some of the new data and analytical insights that the ABS produced in response to COVID-19.

Section 1: Executive summary

COVID-19 global uncertainty continued in the September quarter 2020. Internationally by 30 September, there had been around 34 million confirmed cases of COVID-19 and around 1 million deaths attributed to the virus.

The March and June quarters of 2020 saw the Australian economy contract as COVID-19 placed Australia and most of the world into lockdowns and/or travel and social distancing restrictions. 

The September quarter was characterised by a gradual opening of the Australian economy, with domestic restrictions progressively eased in most parts of the country. This was coupled with continued unprecedented economic support by governments and the Reserve Bank of Australia.

The early signs of national recovery, seen across most economic statistics during the quarter, were tempered by second wave impacts, and the continued effects from restrictions on domestic and international travel and social distancing. Businesses in the Accommodation and food services and Arts and recreation services industries remained acutely affected by these restrictions, particularly in Victoria.

The number of confirmed new daily cases of COVID-19 in Australia rose from around 80 at the start of the September quarter to a peak of around 700 at the end of July, to less than 20 by the end of September. Most of these new infections were in Victoria, where the second wave was much larger than the first wave and brought Victoria into focus in the quarter.

Melbourne and the Mitchell Shire returned to Stage 3 restrictions in July. In August, Melbourne moved to Stage 4 restrictions and regional Victoria to Stage 3 restrictions. In September, Victoria took the first step of its roadmap for reopening, with the more significant changes scheduled for October and November. Information on the restriction levels and their implications for different industries can be found on the Victorian Government website.

Between the June and September quarters:

  • There were partial recoveries in chain volume Gross Domestic Product (GDP), employment and hours worked;
  • The level of GDP recovered by $15.3 billion but remained $19.5 billion below the March quarter. This represented 3.3% growth from the June quarter, but remained 3.9% below the March quarter;
  • Employment increased by 242,000 people (2.0%) and hours recovered by 1.9%. Employment remained 3.1% below March and hours down by 5.0%; 
  • The Consumer Price Index increased by 1.6%, following the largest fall in the series in the previous quarter (down 1.9%);
  • The balance on goods and services fell by $8.9 billion (with exports continuing to be greater than imports);
  • Household income increased by 3.4%, household consumption increased by 7.9% and the household savings ratio decreased from 22.1% but remained elevated at 18.9% (compared to 7.6% in March); and
  • The government net operating balance fell from -$84 billion to -$94 billion, as the fall in expenditure (from $254 billion to $253 billion) was outpaced by the fall in revenue (from $171 billion to $159 billion).

In this article:

  1. The use of seasonally adjusted statistics, and current price and chain volume measures aligns with their standard use in the respective published commentary that they have been sourced from; and
  2. The statistics are based on published statistics as of 14 December 2020 and may be revised in the future. The individual economic statistics releases should be used to source the latest estimates.

Section 2: Government fiscal responses to COVID-19

The COVID-19 period saw the fastest and largest fiscal response to an economic event in Australian history, with several hundred policy interventions announced across all levels of government. Expenditure on the JobKeeper wage subsidy alone totalled around $70 billion by 30 September 2020, compared to total Commonwealth government expenditure of $57 billion on all stimulus policies in response to the 2008 to 2009 Global Financial Crisis (GFC).

The classification of the policies in macroeconomic statistics can be found here. The ABS has grouped them into five broad categories:

  1. Increased healthcare and frontline services spending;
  2. Provision of assistance to households (including the JobSeeker Coronavirus Supplement);
  3. Provision of assistance to corporations, unincorporated enterprises and non-profit institutions (including the JobKeeper wage subsidy and Boosting Cash Flow for Employers support);
  4. Relaxation of tax and non-tax revenue obligations; and
  5. Capital injections, establishment of new, or extended, lending facilities and provision of guarantees.

In addition to the fiscal government policy responses, in the September quarter, the Reserve Bank of Australia (RBA) monetary policy responses were also considerable. In addition to maintaining a historically low target cash rate of 0.25% and the yield on 3-year Australian Government bonds of 25 basis points, the RBA increased the size of the Term Funding Facility, for authorised deposit-taking institutions, and made it available for longer.

More information on how the economic responses from Australian governments were reflected in ABS economic statistics can be found in Economic measurement during COVID-19: Selected issues in the Economic Accounts.

2.1 JobKeeper and other support

The JobKeeper wage subsidy continued to account for the majority of government business support in the September quarter, with total payments of $35.8 billion, following $35.1 billion in June quarter. The Boosting Cash Flow for Employers support provided $13.5 billion in the September quarter, following $14.6 billion in the June quarter. In section 4, this article explores how JobKeeper and Boosting Cash Flow for Employers translated into industry support.

Other COVID-19 related subsidies, including those made by state governments, added an additional $2.9 billion in fiscal support in the September quarter.

Source: Government support for business, September quarter 2020

The scale of JobKeeper and Boosting Cash Flow for Employers, both classified as subsidies on production, meant that taxes received from production and imports was less than subsidies paid (-$4.6 billion), though less so than in the June quarter (-$9.0 billion).  

Source: Government support for business, September quarter 2020

2.2 Taxation revenue

Taxation revenue generally falls in the March and September quarters and increases in the June and December quarters. This pattern continued in 2020 but with a much reduced increase in the June quarter (2.5%, compared to 13.1% in June 2019) and a smaller fall in the September quarter (a fall of 10.1%, compared to 16.3% in September 2019).

As a result, the fall in taxation revenue, in annual terms, narrowed from 8.1% in the June quarter to 1.2% in the September quarter. Total Commonwealth government taxation revenue remained flat through the year (0.0%), while state and local government taxation was down 5.8% over the year.

2.3 Net operating balance for governments

Between the June and September quarters, government expenditure fell slightly (from $254 billion to $253 billion), revenue fell ($171 billion to $159 billion) and the total general government net operating balance fell to -$93.6 billion.

Source: Government Finance Statistics, Australia, September 2020

The Commonwealth government was the major contributor to the decrease in the net operating balance reflecting a number of new and ongoing Commonwealth economic COVID-19 support packages provided to businesses, employees, and households.

  1. Commonwealth and State & Local Net Operating Balance are not additive to All Australia Net Operating Balance due to consolidation and the inclusion of public universities

Source: Government Finance Statistics, Australia, September 2020

Western Australia was the only state where state and local governments returned to a positive net operating balance in the September quarter. Victoria recorded the most significant quarterly fall (from -$0.5 billion in June to -$3.8 billion in September), reflecting continued spending increases on subsidies and health services related to the COVID-19 pandemic.

Section 3 – The aggregate national picture

Australian chain volume Gross Domestic Product (GDP) fell in both the March and June quarters, with the 7.0% fall in June the largest since the series began in 1959. Between the June and September quarter, GDP grew by $15.3 billion, or 3.3%, the largest quarterly increase since March 1976. Despite this early recovery, GDP remained $19.5 billion (3.9%) below the March quarter and around the level of GDP in December 2017.

Source: Australian National Accounts: National Income, Expenditure and Product, September 2020

Domestic final demand (the sum of final consumption and investment, by both private and public sectors) contributed 4.3 percentage points to GDP growth. Around 4.0 percentage points of this was attributed to recovery in private demand, as the easing of restrictions saw household final consumption expenditure lift. This followed a large fall of 7.9% in private demand in the June quarter.

Source: Australian National Accounts: National Income, Expenditure and Product, September 2020

3.1 International travel restrictions continued to impact the economy

International travel restrictions continued in the September quarter. The changing pattern of overseas arrivals and departures had a profound impact on business conditions across the June and September quarters. These impacts particularly affected economic activity related to tourism and higher education.

The year ending January 2020 saw a record 9.5 million visitors arrive in Australia, prior to the progressive implementation of travel restrictions. Tighter restrictions affecting all international travel from 20 March resulted in a dramatic fall in visitor arrivals into Australia, of close to 100%, with only 5,400 visitor arrivals in the month of June and 3,700 in September.

Source: Overseas Arrivals and Departures, Australia, September 2020

The number of international students arriving in Australia remained low, at around 80 people during September, down from around 45,300 (-99.8%) in September 2019. This followed similarly small numbers in July (40 people) and August (50 people).

The impact of dramatically reduced international arrivals was evident in the trade in services estimates, which decreased 24.2% in the June quarter and 8.7% in the September quarter. This was particularly pronounced for travel services, which fell 28.9% in the June quarter and 16.6% in the September quarter.  Education-related travel services partially buffered these falls in travel services, given most international students had already arrived in Australia prior to the COVID-19 pandemic and related travel restrictions taking effect.

Although the September quarter saw the 11th consecutive surplus in the balance on goods and services (a trade surplus) and a sixth successive current account surplus, the size of the surplus fell from the June quarter. Compared to the June quarter, the balance on goods and services decreased by $8.7 billion (39%) to $13.6 billion. 

The balance on goods fell by around 45% and services by 23%, reflecting further falls in exports of goods and services from the June quarter (the result of weaker demand for mining commodities and constraints on travel) and an early partial recovery in imports of goods and services. The recovery in imports partly reflected early recovery in global supply chains that were heavily disrupted in the June quarter (e.g. the supply of new cars) as international production was affected by lockdowns.

(a) Seasonally adjusted estimates at current prices.

Source: Balance of Payments and International Investment Position, Australia, September 2020

Australia's net international investment liability position (which measures the stock of Australia's foreign financial liabilities minus foreign financial assets at a point in time) increased by $3.6 billion between 30 June 2020 ($939.1 billion) and 30 September 2020 ($942.8 billion).

Australia's net foreign debt liability position increased by $47.5 billion to $1,157.8 billion, and Australia's net foreign equity asset position increased $43.8 billion to $215.0 billion.

A key contributor to the large incurrence of liabilities was the significant amounts of debt securities issued by both Commonwealth and state governments to fund expenditure to support the economy during the COVID-19 pandemic (which were large enough to reduce total general government net worth by $124.8 billion in the September quarter).

Source: Balance of Payments and International Investment Position, Australia, September 2020

'Net IIP' refers to the net international investment liability position (i.e. Australia's foreign financial liabilities minus foreign financial assets).

3.2 Employment, hours and participation

In the June quarter, lockdowns, business restrictions and social distancing saw unprecedented falls in employment and hours, and an increased number of people reporting they had insufficient work or zero hours. As restrictions eased across most parts of the country in the September quarter, employment and hours increased.

By the end of September, Labour Force statistics showed employment recovering to sit 3.1% below March (compared to 6.7% below in May, part way through the June quarter).  As more people returned to work or had their hours increased, hours worked recovered from the 10.4% fall between March and May, to remain 5.0% down in September. The underemployment rate fell over this period, from a record high in April (13.8%) to 11.4% in September. 

Source: Labour Force, Australia, October 2020

In April, an estimated 1.8 million employed people in Australia worked fewer hours than usual or no hours at all due to economic reasons (that is, due to having no work, not enough work available or being stood down). By September this had halved.  

Employed people who worked zero hours for economic reasons also fell significantly over the period, from a peak of 700,000 in April to 200,000 in September.

During the June quarter, restrictions also had a significant impact on participation. A large number of people left the labour force between March and May resulting in the participation rate falling from 66.0% to 62.7% in May, the lowest since January 2001.

During the September quarter, the participation rate progressively recovered to 64.9%, boosted by a return of people into employment, and also unemployment, as people resumed active job search and had increased availability to work. Over the quarter the national unemployment rate remained elevated, at levels between 6.9% and 7.5%.

3.3 Labour demand

Between May and August, job vacancies recovered strongly, increasing 59.4%. This followed an unprecedented 43.1% fall between February and May. This represented a 78% recovery in vacancies.   

Source: Job Vacancies, Australia, August 2020

Private sector vacancies increased by 65.4% in August (following a 44.9% fall in May), reflecting a recovery over the COVID period of around 80%. This recovery was more pronounced than in the public sector, where vacancies recovered by 55% (with public sector vacancies falling by 28.9% in May and only increasing by 22.0% in August).

3.4 Household income increased

Following a 3.0% increase in the June quarter, household gross disposable income increased by a further 3.4% in the September quarter.

Non-labour income continued to be the largest contributor to growth in household income, but reflected a greater contribution from investment income and earnings from unincorporated business in the quarter, rather than social assistance benefits (which was the key contributor to growth in the June quarter, increasing by 42.8%). After providing a negative contribution in the June quarter, the rebound in compensation of employees in the September quarter also contributed to the increase in household income, as some employees returned to their jobs.

Source: Australian National Accounts: National Income, Expenditure and Product, September 2020

3.5 Household consumption rebounded

The unprecedented falls in household spending (12.5%) in the June quarter were partially reversed in the September quarter 2020 by the largest rise in the history of National Accounts (7.9%). The quarterly rise reflected increased spending with easing of COVID-19 restrictions. Consumption nevertheless remained weak through the year, down 6.5%.

Source: Insights into household consumption, September quarter 2020

Services were the largest driver to increased household spending (increasing by 9.8%) with consumption of goods increasing by 5.2%.  There was strong demand across all the broad categories.

Source: Insights into household consumption, September quarter 2020

Household spending in the quarter was driven by partial recovery in spending on hotels, cafes and restaurants, recreation and culture and transport. Household spending remained weak through the year, reflecting reduced holiday travel due to international and domestic border closures, as well as the Victorian lockdown. Household expenditure on health categories recovered in the September quarter, up 26.0%, as visits to health providers increased and elective surgeries resumed.

Source: Insights into household consumption, September quarter 2020

3.6 Price growth rebounded but remained low

The partial recovery in household spending coincided with low price growth. The CPI increased by 1.6% in the quarter, partly reversing the fall of 1.9% in the June quarter, which was the largest quarterly fall in the 72-year history of the CPI.

A little over half (0.9 percentage points) of the increase in the September quarter was attributed to the end of the Early Childhood Education and Care Relief Package, which provided fee-free child care to households in the June quarter.

Significant price rises were also seen in automotive fuel (9.4%), following a rebound in world oil prices and increased travel, and pre-school and primary education (11.1%), with before and after school care no longer free. Both of these recorded significant price falls in the June quarter (and were key contributors to changes in the ‘non-discretionary’ expenditure group, based on recent ABS analysis).

The annual change in CPI remained low but positive in the September quarter at 0.7%, having fallen to -0.3% in the June quarter, only the third time it was negative in the 72-year history of the measure. Consumer prices remained noticeably weaker than growth in the wage price index, 1.4% over the year (but just 0.1% in the September quarter).

Source: Consumer Price Index, Australia, September 2020

In the June quarter, rents recorded the first quarterly fall since the series commenced in 1972, which, in most capital cities, continued in the September quarter.

Water, sewerage and electricity prices remained lower during the COVID-19 period, driven by utility rebates and price reviews in some capital cities to support households.

3.7 Household saving ratio remained high and household borrowing recovered

In the September quarter, the household saving to income ratio declined from its record high in the June quarter, but remained elevated at 18.9%. The fall was driven by the partial recovery in household consumption, which outpaced income growth.

Source: Australian National Accounts: National Income, Expenditure and Product, September 2020

New housing loan commitments increased strongly across the September quarter. Owner occupier housing loan commitments were at historically high levels, underpinned by record low interest rates. There was particularly strong growth in commitments for the construction of new dwellings, which coincided with the implementation of the HomeBuilder grant.

The value of owner occupier home loan commitments rose across the quarter for all states and territories, although decreases were seen late in the quarter in Victoria and Tasmania.

The value of new loan commitments for fixed term personal finance remained relatively weak, around 10.1% below September 2019. Personal finance to support the purchase of road vehicles recovered to close to pre-pandemic levels, which provided another indication of the partial recovery in global supply chains for new cars imports that were disrupted in the June quarter.

Source: Lending indicators, September 2020

Section 4 – Industries

The recovery in the September quarter showed significant variation by industry. From a gross value added (GVA) perspective, the largest June quarter falls were in the Accommodation and food services and Arts and recreation services industries.  Relative to the March quarter, the GVA falls in the September quarter were most pronounced in Administrative and support services and Transport, postal and warehousing industries.

In the September quarter payroll jobs data continued to show Accommodation and food services and Arts and recreations services industries as the most adversely affected industries in terms of employee jobs. Impacts on hours worked were greatest in the Arts and recreation services and Other services industries.

Support from the JobKeeper wage subsidy and Boosting Cash Flow for Employers continued into the September quarter.

Given the strong growth in household consumption, the September quarter saw recovery in quarterly retail turnover, supported by a continued high level of online retail.

4.1 Business conditions improved but with differing impacts across industries

Business conditions improved progressively through the September quarter, with the ABS survey on the business impacts of COVID-19 showing a steady decline each month in businesses reporting decreases in revenue and/or modified operations.

In the June quarter, 15 of the 19 industries recorded falls in GVA.  The Accommodation and food services and Arts and recreations services industries were the most impacted with GVA falling by 38.6% and 23.9%.

In the September quarter, 17 of the 19 industries saw increases in GVA, including Accommodation and food services and Arts and recreations services. Mining and Agriculture, forestry and fishing were the only two industries where GVA fell from the June quarter (down 1.7% and 0.6%).

Source: Australian National Accounts: National Income, Expenditure and Product, September 2020

These changes in industry GVA were also reflected in changes in the relative share of GVA by industry. For example, Accommodation and food services and Arts and recreation services together accounted for 3.4% of total GVA in the March quarter, which then fell to 2.4% in the June quarter, before rising to 3.0% in the September quarter. The Administrative and support services industry’s share of total GVA fell from 3.9% in March, to 3.4% in June and 3.3% in September.

Changes in hours worked by industry in the quarterly Labour Account also presented a related picture of industry impacts across the June and September quarters. In the September quarter hours were the most impacted in the Arts and recreation services industry (22.4% below the March quarter), Other services (21.3%), Accommodation and food services (12.3%) and Transport, postal and warehousing (11.4%).

4.2 Impacts on jobs continued to be greatest in industries impacted by restrictions

Weekly payroll jobs data has provided more frequent insights into how the pandemic affected industries over the period, showing change on a week to week basis. This new data showed that there were three broad groups of impacts by industry:

  1. Accommodation and food services and Arts and recreation services were the most affected industries – with the most severe impacts seen in mid-April when payroll jobs were down around 35% and 28%;  
  2. Finance and insurance services, Public administration and safety, Electricity, gas, water and waste services, and Health care and social assistance were the least impacted industries; and
  3. The remaining industries formed a group between these two groups.

Source: Weekly Payroll Jobs and Wages in Australia, Week ending 3 October 2020

4.3 Business exits remain low, particularly in impacted industries

New ABS quarterly counts of business entries and exits showed that business entries in the June and September quarters were comparable with recent years. In contrast, business exits were lower in both quarters compared to previous years. 

The lower business exits reflected lower levels of business cancellations than in recent years, particularly in industries impacted by COVID restrictions, like Accommodation and food services. Lower levels of business cancellations reflected a range of factors, including the time it takes for a business to formally close; delays in the reporting process; the government support packages around COVID-19 (including temporary changes to insolvency rules); businesses pausing temporarily to determine ongoing viability; or an increase in demand and innovation in some industries.

4.4 Labour costs remained low as JobKeeper support continued

In the June quarter 2020, the ABS temporarily reinstated the Labour Price Index (LPI) to provide insights into the influence of the subsidies on labour costs.  The LPI is complementary to the Wage Price Index, which excludes subsidies. There was a large fall of 12.5% in the LPI in the June quarter 2020 as wages and payroll tax components fell, with the introduction of the JobKeeper subsidy and payroll tax waivers. The LPI recorded a rise in the September quarter of 2.9%, with moderate wage rises and the reduction of support programs more than offsetting small increases in the take up of JobKeeper.

In the June quarter, in line with the National Accounts, the LPI showed that the industries where JobKeeper accounted for the highest share of total compensation of employees – Arts and Recreation Services, Accommodation and Food Services, and Other services - were also the industries where labour costs fell the most during the COVID-19 period.

This relationship was less pronounced in the September quarter, as the compensation of employees recovered to differing extents across industries.

Source: Labour Price Index: Changing labour costs through COVID-19

4.5 Boosts to cash flows continued to support impacted industries

In addition to the JobKeeper wage subsidy, the relative contribution of the Boosting Cash Flow for Employers support also varied by industry. Its contribution, relative to gross operating surplus, was highest in the Other services (23.3%), Health care and social assistance (20.9%), and Administrative and support services (18.1%) industries.

Boosting Cash Flow for Employers relative to gross operating surplus in the Accommodation and food services industry was 13.4% in the September quarter, down from 20.8% in June quarter reflecting progressive recovery in this industry as COVID-19 related restrictions eased outside of Victoria.

Source: Government support for business, September quarter 2020

4.6 Recovery in quarterly retail turnover and continued strength in online retail

The September quarter saw the largest quarterly increase in retail turnover in the 37-year series, increasing by 6.5%, following the large fall of 3.5% in the June quarter. Quarterly growth at the national level was partially offset by Victoria, which fell 4.2 per cent.

Source: Retail Trade, Australia, September 2020

The further easing of trading restrictions in the September quarter saw large increases in quarterly turnover for Cafes, restaurants and takeaway food services (28.1 per cent), and Clothing, footwear and personal accessory retailing (35.5 per cent). However, both of these industries continued to trade below September 2019 levels.

Household goods retailing remained at an elevated level but fell from its peak of the May-July period, with retailers reporting ongoing spending by households on furniture, home entertainment, home offices, and home improvement.

Online retail sales saw large rises in March (14.7%) and April (27.1%), as consumers adjusted to restrictions introduced to encourage social distancing and turned to online shopping. May to August saw smaller increases followed by a small fall in September (1.6%). Part of the increase in August reflected the response to Stage 3 and 4 restrictions in Victoria, especially in Melbourne.

Source: Retail Trade, Australia, October 2020

Section 5 – Second wave impacts in Victoria

The early signs of national recovery, seen across most economic statistics during the quarter, were tempered by second wave impacts in Victoria. As the number of confirmed new daily cases of COVID-19 in Victoria rose early in the September quarter, and surpassed infections from the first wave, a series of severe restrictions were introduced in the state to contain the spread of the virus. As a result, the second wave economic impacts in Victoria were more pronounced than the first wave and brought the state into focus in the quarter.

State final demand fell in Victoria in the September quarter, but recovered in all other states and territories. Similarly, employment, hours, participation and jobs fell in Victoria during the quarter, but recovered elsewhere.

Regional economic statistics, such as weekly payroll jobs data, showed the relative impact on regions in Victoria, compared with regions across the rest of the country, and highlighted the acute impact on people living in Melbourne.

5.1 State final demand and household consumption increased outside of Victoria

In the June quarter, all states and territories saw a fall in state final demand. In the September quarter, Victoria was the only state or territory to record a fall in state final demand, down 1.0%, following a fall of 8.5% in the June quarter. State final demand rebounded by 4.9% or more in six of the remaining seven states and territories, with the outlier being the ACT, which increased by 2.0%, following a smaller fall in the June quarter (1.7%).

The largest contributor to the changes in state final demand was household consumption. With most states and territories easing restrictions during the September quarter, household consumption outside Victoria grew by 11.0%, but remained 3.1% down through the year. Victoria’s second wave of COVID-19 cases and consequent introduction of strict containment measures saw household consumption fall by a further 1.2%, following the 14.0% fall in the June quarter, to be down 16.0% through the year.

Source: Insights into household consumption, September quarter 2020

Further analysis of the relative impact of the effect of the different COVID-19 containment measures across the states and territories on state final demand and state household consumption can be found in State economies and the stringency of COVID-19 containment measures.

5.2 Recovery in employment, hours and participation outside of Victoria

In the September quarter, the second wave impacts in Victoria resulted in different changes in employment and hours compared to the rest of Australia. While employment and hours were 1.9% and 1.8% below March in the rest of Australia in September, the impact of second wave restrictions in Victoria saw employment and hours at their lowest point in the COVID period, down 6.5% and 13.8%.

Source: Labour Force, Australia, October 2020

Source: Labour Force, Australia, October 2020

The number of people working zero hours for economic reasons fell in all states and territories from April. The second wave impacts in Victoria resulted in this increasing again and by September around half of the people working zero hours for economic reasons in Australia were in Victoria.

Source: Insights into hours worked, October 2020

While labour force participation increased across most of the country during the September quarter, the second wave restrictions in Victoria saw a further fall in the size of the labour force in the state. The Victorian participation rate fell further during the September quarter, down to 62.9%, the lowest since May 2004.

5.3 Recovery in jobs outside of Victoria

The impacts in Victoria from the second wave restrictions were also seen in payroll job changes. By the end of September, payroll jobs in Victoria were 6.5% below mid-March, compared to 2.0% for the rest of Australia (with the other states and territories ranging from 3.6% down in Tasmania to being at the mid-March level in Western Australia).

Source: Weekly Payroll Jobs and Wages in Australia, Week ending 3 October 2020 (Table 4 and unpublished data)

Different payroll jobs impacts by industry were also evident for Victoria and the rest of Australia. Accommodation and food services and Arts and recreation services in Victoria were particularly impacted, together down 26.3% at the end of September, compared to 8.7% in the rest of Australia.

Source: Weekly Payroll Jobs and Wages in Australia, Week ending 3 October 2020 (unpublished data)
Divisions H and R includes Accommodation and food services, and Arts and recreation services. Divisions D, K, O and Q includes Electricity, gas, water and waste services, Finance and insurance services, Public administration and safety, and Health care and social assistance. These three groups are discussed in Section 4.2 of this article.

There was also considerable variation in regional labour market impacts. Of all the statistical area level 4 (SA4) regions in Australia, people living in Inner Melbourne were the most affected by job losses (down 8.4% on mid-March), followed by the North West of Melbourne (down 7.4%) and the Mornington Peninsula (7.2%). All 17 of Victoria’s SA4s were in the top 20 most impacted regions at the end of September, with Sydney City and the Inner South, West and North West Tasmania, and Launceston and the North East of Tasmania also in that group.

The ABS also added SA3 data to the Weekly Payroll Jobs and Wages release during the September quarter, including a SA3 interactive map.

5.4 Recovery in labour demand across states and territories through the September quarter

All states and territories recorded increases in job vacancies from May to August, including Victoria.

In August, the two largest states, New South Wales and Victoria, were still well below the pre-pandemic levels of vacancies in February (down 22% and 23%), as was the Australian Capital Territory (down 15%).

Vacancies in the other jurisdictions increased to higher levels than February.

5.5 Labour costs remained low in states with larger private sector employment

After recording significant falls in labour costs across all state and territories in June quarter 2020, the rate of increases in September quarter LPI varied across jurisdictions, aligned with the extent of government support (particularly JobKeeper).

Victoria saw the second largest fall in labour costs in the June quarter, after New South Wales, and saw a smaller rise than other large states in the September quarter. This partly reflected the significant increase in JobKeeper payments in Victoria in the quarter.

Source: Labour Price Index: Changing labour costs through COVID-19

Conclusion

The September quarter was characterised by a gradual opening of the Australian economy, and continued unprecedented economic support from governments and the Reserve Bank of Australia.

The early signs of national recovery, seen across most economic statistics, were tempered by second wave impacts, and the continued effects from restrictions on domestic and international travel and social distancing.

The extent of impacts and recovery continued to vary by industry and state. Victoria was particularly hard hit, with many economic statistics for the state showing a more pronounced impact in the September quarter.

The lead authors of this article, Bjorn Jarvis and Jacqui Jones, would like to recognise the contributions of analysis provided by teams across ABS economic statistics, including the teams who worked on the National Accounts, International Accounts, labour statistics, prices statistics, government financial statistics, lending finance statistics, retail trade, business demographics and migration statistics, and Emma Nielson, for her support in publishing the article.

We would like to thank the business and household survey respondents who continued to respond to our surveys during this challenging period. Without their cooperation we would not have been able to produce this wide range of economic information and insights.

Finally, we would also like to thank other organisations that have made additional data available to the ABS to enhance the measurement of the Australian economy during the COVID-19 period, such as the Australian Taxation Office, that has enabled the production of new weekly payroll statistics.

The ABS may publish further overviews of the Australian economy in this analytical series and also hopes to explore additional topics in 2021.