Bosses and consumers show resilience in the face of COVID

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Australian bosses and consumers are expressing some resilience in the face of the Omicron outbreak, despite the disruption this strain of COVID-19 is causing to the economy.

The Westpac-Melbourne Institute’s monthly consumer sentiment index fell just 2% in January.

“This is a surprisingly strong result given the rapid spread of the Omicron COVID variant over the past month,” said Westpac chief economist Bill Evans.

It compares to the 5.2% drop seen in the first month of the Delta outbreak in New South Wales, to a 6.1% drop before Victoria’s “second wave” outbreak in 2020 and the epic 17.7% collapse when the pandemic first hit in early 2020.

However, responses showed a deterioration during the survey between January 10 and 14, which Mr Evans said indicates some heightened anxiety as the week progressed.

While consumers’ short-term expectations for the economy showed the biggest drop, they were also not confident about the outlook for their finances over the next 12 months.

“This nervousness would be consistent with the sharp deterioration in the economic outlook, but could also reflect changing interest rate expectations,” Evans said.

In January, 55% of respondents expected mortgage interest rates to rise over the next 12 months, up from 41% in August and 36% a year ago.

A separate survey by employment specialist Robert Half found nearly three-quarters of respondents were confident about their growth prospects in 2022 compared to 2021.

While the survey was conducted in November and December and before Omicron took hold, Robert Half director Nicole Gorton said the past two years of COVID-related disruptions have boosted agility and resilience. organizational adaptability of companies,

“Australian businesses are generally well prepared to weather the latest COVID outbreak as they continue to pursue their strategic priorities for the year,” she told AAP.

Four of five of 300 hiring managers surveyed, including CFOs and CIOs, plan to hire permanent staff this year, though half expect it to be more difficult than before the pandemic.

“Even with the gradual return of international migration this year, the lack of skilled talent entering the market over the past two years will take at least the same time to recover, if not longer,” she said.

Ms Gorton says fierce competition for qualified staff has put jobseekers in the driver’s seat for better pay and benefits.

The survey found that nearly two in five bosses consider meeting candidates’ salary expectations to be their biggest challenge.

However, economists are now less certain of the outlook here due to the impact of Omicron, which has seen a massive rise in COVID-19 infections and deaths, and led to further upheaval in supply chains. supply.

As economists at the Commonwealth Bank Group expect unemployment to remain low, they have cut their March quarter economic growth forecast to 1% from an estimate of 2.3% before the Omicron epidemic.

“With a spike in new cases not expected for several weeks, output, hours worked and consumption will all be impacted in the March quarter,” said Commonwealth Securities senior economist Ryan Felsman.

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