Employers’ organisation Australian Industry Group says easing COVID-19 restrictions and delivering further policy actions to unlock consumer and business spending are critical to stemming the rapid pace of decline in the Australian economy. Releasing its latest business performance index, Ai Group said: “The steepest declines in performance were in retail trade & hospitality, apartment building, commercial construction and among businesses manufacturing textiles, clothing, footwear, paper & printing products.”
Ai Group’s Performance of Business Index (Australian PBI) fell a further 12.6 points to 27.2 points in April (seasonally adjusted) - the lowest monthly result and the largest single-month drop since the survey commenced in 2005.
“All four activity indices in the Australian PBI plummeted in March and again in April as COVID-19 restrictions were rolled out nationally,” Ai Group said. “The indices for business activity and employment fell to record lows in April (seasonally adjusted and trend). This confirms ABS data showing that 72% of business expect reduced cash flow and 69% expect reduced demand as a result of COVID-19 activity restrictions. More than 1 million Australians – 7.5% of the workforce – had already lost their jobs in the month to 18 April.
“Looking ahead, the new orders index plunged to a new record low in April (23.1 points, seasonally adjusted), while the supplier deliveries index is at its lowest since 2009 (33.1 points, seasonally adjusted). Capacity utilisation fell to a record low of 67.9% of existing capacity across all business sectors.
“This sudden and rapid deterioration in business conditions is evident across all sectors of the economy but is especially pronounced in consumer-oriented services that are shut down, including hospitality, transport and recreational services. The giant construction industry remains open but is reporting a severe downturn in new orders, activity and employment.”
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Results below 50 points indicate deteriorating business conditions in the month, with lower numbers indicating a faster pace of deterioration |
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'Precipitous fall in April':
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"Business performance fell precipitously in April as businesses were shut down by social distancing restrictions; supply chains were disrupted; and households and businesses withdrew their contributions to spending,” said Ai Group CEO Innes Willox. “Production and activity were curtailed in all but a few areas of the economy such as medical, food & grocery manufacturing and IT services. The steepest declines in performance were in retail trade & hospitality, apartment building, commercial construction and among businesses manufacturing textiles, clothing, footwear, paper & printing products.
"Even following the announcement of the JobKeeper scheme, the labour market was hit hard in April with the Australian PBI employment index plunging to its lowest reading in the life of the series (since 2005). The forward-pointing new orders series also hit a record low, lending no encouragement to hopes of a rapid recovery. Easing restrictions and delivering further policy actions are critical to stemming the pace of decline and would help unlock consumer and business spending."
More details can be found here.
