1016.0 - The Australian Statistician's analytical series, 2020  
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Households


2.1 Jobs and hours worked fell

For most of the March 2020 quarter, there was no noticeable impact on the labour force from the bushfires or COVID-19. Labour Force Survey data showed the seasonally adjusted unemployment rate remained between 5.1 and 5.3% from January through to March.

However, late in the March quarter, with the shutdown of non-essential services and new trading restrictions due to COVID-19, the jobs and labour market landscape changed dramatically. This was strikingly apparent in the first release of Weekly Payroll Jobs and Wages in Australia based on Single Touch Payroll data from the Australian Taxation Office.

Weekly Payroll Jobs and Wages in Australia (19 May release, which incorporates revisions from earlier releases) showed that between 14 March and 4 April (the three weeks after Australia recorded its 100th confirmed COVID-19 case) payroll jobs decreased by 6.3%. with the largest impact of net job losses, in percentage terms, affecting people under 20 (15.7%).

Travel bans and social distancing restrictions inflicted the heaviest losses on Accommodation and food services, with the industry shedding 27.2% of its payroll jobs. Jobs in the Arts and recreation services industry fell by 20.6%, while across all industries, total wages paid by businesses decreased by 5.3% over the period.

Figure 4: Changes in payroll jobs between 14 March and 4 April, by industry
Figure 4 shows Changes in payroll jobs between 14 March and 4 April, by industry
Source: 6160.0.55.001 - Weekly Payroll Jobs and Wages in Australia, Week ending 2 May 2020

Other ABS statistics subsequently provided more detail and context. Seasonally adjusted employment estimates from the Labour Force Survey fell by 594,300 people between March and April. However, this large drop in employment didn’t translate into a similar-sized rise in the number of unemployed people because around 489,800 people left the labour force.

While the unemployment rate increased by 1.0 percentage point to 6.2%, the larger than usual number of employed and unemployed people leaving the labour force resulted in an unprecedented 2.4 percentage point fall in the participation rate to 63.5%. When taken together with people leaving the workforce, around 2.7 million people (about 1 in 5 people employed in March) either left employment or had their hours reduced between March and April.

As a result, the number of underemployed people also rose sharply (up 603,300 people, to a total of 1.8 million people), and the underemployment rate rose to a record high of 13.7% (up 4.9 percentage points).

The underutilisation rate, which combines the unemployment and underemployment rates, also rose to a record high of 19.9%.

The impact of the COVID-19 pandemic on hours worked, a key measure of labour input into the economy, was also extensive. The Labour Account estimate of hours worked fell 0.8% in the March quarter, with significant impacts on key national accounts aggregates including GDP per hour worked and unit labour costs.

Figure 5: GDP per hour worked, seasonally adjusted
Figure 5 shows GDP per hour worked, seasonally adjusted
Source: 5206.0 - Australian National Accounts: National Income, Expenditure and Product, Mar 2020 – Hours worked in the national accounts


2.2 Household non-life insurance claims rose

In the March quarter, over 2,000 dwellings were destroyed in the bushfires and properties and cars were damaged in the 19 and 20 January hailstorms. These resulted in household non-life insurance claims increasing by $1.4 billion compared to the previous quarter, and took the value of household claims to a record high of $13.8 billion. The economic activity associated with rebuilding destroyed or damaged dwellings, commercial buildings and infrastructure will be reflected in upcoming quarters.

Figure 6: Total value of household non-life insurance claims, current prices: seasonally adjusted
Figure 6 shows Total value of household non-life insurance claims, current prices: seasonally adjusted
Source: 5206.0 - Australian National Accounts: National Income, Expenditure and Product, Mar 2020 – Bushfires in the national accounts


2.3 Household income rose from increased social benefits

Household gross disposable income rose 1.4% in the March quarter 2020. Compensation of employees was subdued with reduced hours and job losses. Increases in social benefit recipients and the value of benefits drove the quarterly increase, contributing 0.6 percentage points to growth. This was the largest contribution from social assistance benefits since the Household Assistance Package in June 2012. The first $750 economic support payment and Australian government disaster support payments contributed to the increase.

Figure 7: Household gross disposable income, contribution to quarterly growth, current prices: seasonally adjusted
Figure 7 shows Household gross disposable income, contribution to quarterly growth, current prices: seasonally adjusted
Source: 5206.0 - Australian National Accounts: National Income, Expenditure and Product, Mar 2020 – Insights into household income

Figure 8: Social assistance benefits payments and recipients
Figure 8 shows Social assistance benefits payments and recipients
Source: 5206.0 - Australian National Accounts: National Income, Expenditure and Product, Mar 2020 – Insights into household income, based on ABS and Department of Social Services Data, see also https://data.gov.au/dataset/ds-dga-728daa75-06e8-442d-931c-93ecc6a57880/distribution/dist-dga-1120abb8-997b-4d3a-b262-4c84f9c92985/details?q=jobseeker


2.4 Household consumption fell with a decrease in demand for services

Notwithstanding the modest growth in household income, household consumption decreased by 1.1% in the March quarter and by 0.2% for the year. These were the first falls in household final consumption expenditure since the global financial crisis.

Figure 9: Household consumption, volume measures, seasonally adjusted
Figure 9 shows Household consumption, volume measures, seasonally adjusted
Source: 5206.0 - Australian National Accounts: National Income, Expenditure and Product, Mar 2020

The decrease in the March quarter 2020 was driven by a 2.4% fall in services consumption, partly offset by an increase in goods consumption of 1.0 percent.

Figure 10: Goods and services consumption, volume measures, seasonally adjusted
Figure 10 shows Goods and services consumption, volume measures, seasonally adjusted
Source: 5206.0 - Australian National Accounts: National Income, Expenditure and Product, Mar 2020

The fall in services consumption was particularly acute for some services:

  • Travel disruptions, reduced foot traffic and bushfires drove a large fall in hotels, cafes and restaurants, with falls across both catering services and accommodation services categories.
  • Reduced demand for travel and stay-at-home measures led to a decrease in transport services, particularly air passenger services.
  • Social distancing measures and the deferral of elective medical procedures resulted in a reduced supply and demand for health services.
  • Restrictions on indoor and outdoor gatherings had a major impact on recreational and cultural services, particularly on gambling activity, sporting services and cinema admissions.

Figure 11: Individual services consumption through the year, volume measures, original
Figure 11 shows Individual services consumption through the year, volume measures original
Source: 5206.0 - Australian National Accounts: National Income, Expenditure and Product, Mar 2020 – Household consumption behaviour in response to COVID-19


2.5 Household saving to income ratio rose

The household saving to income ratio rose to 5.5%, up from 3.5% in the December quarter, reflecting both the rise in gross disposable income and falls in consumption. This was the highest household saving to income ratio since September 2016.

Figure 12: Household saving to income ratio, seasonally adjusted
Figure 12 shows Household saving to income ratio, Seasonally adjusted
Source: 5206.0 - Australian National Accounts: National Income, Expenditure and Product, Mar 2020


2.6 Food prices rose due to drought, bushfires, COVID-19 and international demand

Early in 2020, the drought had severe adverse impacts on Australia’s agricultural growing regions, placing significant pressure on producers seeking to meet domestic and international demands. This impacted the prices paid by consumers and businesses for agricultural products such as fruit and vegetables, meat, milk and dairy products.

As the bushfires intensified in January, tourism-related activity such as domestic travel, accommodation and food services declined in the affected areas. The fall in the number of people visiting regional areas, and supply chain disruptions due to the bushfires, were evident in the scanner data for food sold in regional areas.

Food sales were higher in the capital cities than in regional areas across all of the states and territories that have significant regional populations, particularly New South Wales and Victoria.

Figure 13: Scanner data food volumes, quarterly growth, original
Figure 13 shows Scanner data food volumes, quarterly growth, original
Source: 5206.0 - Australian National Accounts: National Income, Expenditure and Product, Mar 2020 – Bushfires in the national accounts

Other events in the March quarter compounded difficulties for farmers and price effects flowed through to households. Table 1 shows where March quarter 2020 events raised food category prices.

Table 1: Notable March quarter events impacting food category prices

Sub-Group
Drought
Bushfire
International demand
COVID-19

Bread and cereal products
X
X
Meat and seafoods
X
X
X
X
Dairy and related products
X
X
Fruit and vegetables
X
X
X
Food products n.e.c.
X
X
X
Non-alcoholic beverages
X
Meals out & takeaway
X
X

Source: 6401.0 - Consumer Price Index, Australia, March 2020

More detailed information on the actual price movements in these food categories is available from the Consumer Price Index (CPI), which measures the prices paid by Australian households for a basket of goods and services. The most significant price rises in the March 2020 quarter were for food and non-alcoholic beverages (+1.9%), alcohol and tobacco (+1.6%), education (+2.6%) and health (+1.7%).

The most significant price falls for the quarter were for automotive fuel (-6.0%), domestic holiday travel and accommodation (-3.1%) and international holiday travel and accommodation (-3.0%).

As shown in Table 1, meat and seafood products was one food category affected by a range of events. In addition to the drought, international demand for Australian meat products increased over 2019 and into 2020, as shown in Figure 14. The increased demand was driven by African Swine Fever (ASF) decreasing the supply of pork products worldwide. Chinese consumers substituted from pork products to alternative proteins, increasing demand for Australian meat products.

Figure 14: Australian meat exports to China
Figure 14 shows Australian meat exports to China
Source: Department of Agriculture, Water and the Environment, see http://www.agriculture.gov.au/export/controlled-goods/meat/statistics

As a result of the increased demand, domestic meat prices rose, and the food category ‘meat and seafood products’, which has a weight of 2.23% in the Australian CPI, rose 5.6% over the year to March quarter 2020.

Figure 15: Meat and Seafood Price Index
Figure 15 shows Meat and Seafood Price Index
Source: 6401.0 Consumer Price Index, Australia, March 2020

Most COVID-19 related restrictions and economic stimuli came into effect in mid to late March, and therefore didn’t have a significant impact overall on the CPI for the March 2020 quarter. However, in response to growing concerns about the global pandemic, Australian households did increase purchases of certain goods and services, which raised their prices.

The Furniture and furnishings group in the CPI rose (+0.8%), which is unusual for the March quarter. The increase was driven by other non-durable household products (which includes toilet paper), household textiles and personal care (including hand sanitisers).

Less discounting, decreased consumer price sensitivity and significant supply chain issues as consumers stocked-up led to a noticeable price effect in the last two weeks of the March 2020 quarter for a range of food products (Table 2).

Table 2: Impact on food prices, % increase
Dec quarter 2019 to mid-March 2020
(Includes drought and
bushfire effects)
Dec quarter 2019 to end-March 2020
(Includes drought, bushfire and
COVID-19 purchasing effects)
Change
(% pts)

Food and non-alcoholic beverages group
1.5
1.9
0.4
Bread and cereal products
0.5
1.2
0.7
Meat and seafoods
1.4
2.0
0.6
Dairy and related products
0.8
1.1
0.3
Fruit and vegetables
4.9
6.0
1.1
Food products n.e.c.
1.6
2.3
0.7
Non-alcoholic beverages
1.2
2.0
0.8

Source: Analysis of detailed (previously unpublished) ABS prices data

Automotive fuel had the most significant price fall for the quarter as COVID-19 travel restrictions reduced demand and global crude oil prices fell. The Petroleum, petroleum products and related materials import price fell 11.1% in the March quarter. In Australia, the price of automotive fuel fell in January (-0.8%), February (-3.4%) and March (-9.3%). Figure 16 shows the average daily prices for unleaded petrol for the eight capital cities over the past fifteen months.

Figure 16: Average price of unleaded petrol (91 Octane), cents per litre

Figure 16 shows Average price of unleaded petrol (91 Octane), cents per litre
Source: 6401.0 - Consumer Price Index, Australia, March 2020

In addition to stockpiling of some food items, household expenditure on a range of other goods rose as people prepared for the possibility of an extended period at home:
  • Purchases of furnishings and household equipment increased, particularly tools and appliances as well as cleaning products.
  • Household purchases of recreational and cultural goods increased with increased expenditure on audio-visual equipment, laptops and computers, as well as sporting equipment.
  • Households also stocked up on pharmaceutical supplies, with increased spending on medicines, medical aids and therapeutic appliances.

Figure 17: Individual goods consumption through the year, volume measures: original
Figure 17 shows Individual goods consumption through the year, volume measures: original
Source: 5206.0 - Australian National Accounts: National Income, Expenditure and Product, Mar 2020 – Household consumption behaviour in response to COVID-19


2.7 Household spending on healthcare fell as a result of social distancing

Compared to the previous quarter, spending on medicines, medical aids and therapeutic appliances increased by 5.4% but total health spending by households fell 1.6% in the March quarter, with health services falling 5.3%.

Social distancing measures led to a reduction in demand for health services that involved face to face interactions, including general practice and allied services such as physiotherapy, dental and optical.

Figure 18: Household final consumption expenditure on health, quarterly change, volume measures: seasonally adjusted
Figure 18 shows Household final consumption expenditure on health, quarterly change, volume measures: seasonally adjusted
Source: 5206.0 - Australian National Accounts: National Income, Expenditure and Product, Mar 2020 – COVID-19 impacts on health activity


2.8 Personal finance commitments declined

Loan commitments to households for personal finance declined significantly at the end of the quarter. There were particularly steep falls in new loan commitments for the purchase of road vehicles (down 10.2%) and for travel and holidays (down 42.8%).

Figure 19: Value of personal fixed term loans by purpose, seasonally adjusted
Figure 19 shows Value of personal fixed term loans by purpose, seasonally adjusted
Source: 5601.0 - Lending Indicators, Mar 2020

The value of new loan commitments for housing slowed slightly over the March quarter 2020 following a period of considerable strength in the second half of 2019. This slowdown started before most COVID-19 restrictions were in place. The slowdown in the March quarter was largely driven by weaker demand from investors for new loan commitments for housing from January to March 2020. Subdued growth in rents and ongoing tighter lending criteria, particularly for interest-only loans, appeared to have been moderating growth in investor lending.