Free | Global Macro & Strategy

How COVID-19 has reshaped Australian households & businesses

The shockwaves caused by the COVID-19 pandemic are still being felt across the economy with extreme readings observed across various economic indicators over the June and September quarters. These include a spike in the unemployment rate to 7.5%, a 7.0% decline in GDP, and a 12% decline in household spending over the June quarter. In this article we look at some of these historic fluctuations and discuss the likely path to recovery.


Household income rose 2.2% over the June quarter despite a 10% fall in hours worked, driven by the increase in social assistance schemes and additional COVID-19 support payments including Jobkeeper. Household spending also declined 12% over the June quarter, reflecting significant changes in spending patterns of consumers due to COVID-19 restrictions around the country. Consumer spending patterns are expected to remain volatile for the remainder of the year, particularly across the services and goods categories.

Household spending


The COVID-19 pandemic has also had a significant impact on businesses with many industries recording declines in gross value added over the June quarter. Hospitality and tourism related industries have recorded the largest declines on record, with payroll data indicating a 15–20% decline in jobs in these sectors over the June quarter.

The mixed fortunes of various industries become more obvious when we look at retail sales data, which have also seen historic swings post March 2020. After an initial spike in March, retail sales fell 17.7% in April before showing a record monthly rise of 16.9% in May. The numbers have turned negative again in August, falling 4.0% over the month, driven by the Victorian lockdowns. Nonetheless, despite the extreme volatility experienced since March, overall retail sales are around 6% above the pre-COVID levels in February 2020. At the industry level, Food and Household goods retailing have grown strongly since March, while sales within the Cafes, Restaurants, Clothing and Footwear segments have recorded double digit declines over the period and continue to remain relatively weak into the December quarter.

Retail sales – seasonally adjusted % change

Online retail and e-commerce have also been a main beneficiary of recent events, with many online businesses seeing a huge influx of orders during the lockdowns. Following a large spike in online sales in March and April, the seasonally adjusted online sales figures rose 81.1% in August 2020 compared to August 2019, highlighting the shift to online shopping at the outset of the COVID-19 pandemic in Australia. While these elevated levels of sales activity are unlikely to continue post the lockdowns, COVID-19 has to some extent expedited the structural shift to online retail, a trend we expect will continue for some time given the relatively low penetration of online sales (around 10%) within retail sales in Australia.

Total online sales

International travel

No industry has been more impacted by the pandemic than tourism and international travel. Overseas arrivals have virtually ground to a halt since March 2020, a far cry from the 9.5 million annual visitors to Australia in the preceding year. This has in turn had a material impact on the local tourism industry, with the federal government indicating the industry is likely to lose $55 billion this year alone. This has forced a swath of companies into survival mode resulting in significant job losses across the sector.

To date, not all companies have been able to navigate the challenging environment. The likes of Virgin Australia and STA travel fell into administration in 2020, while companies like Qantas, Sydney Airport, Flight Centre, and Webjet have been forced to raise emergency funds via discounted equity raisings to survive.

Short term visitor arrivals

Unlike some of the other industries that are expected to experience a rather speedy recovery over the next 12 months, the recovery in international travel remains uncertain. The commentary we are seeing from the likes of Qantas and Sydney Airport indicate that international travel is unlikely to return to pre-COVID levels until 2024, implying a long and slow recovery for industry participants.


The economic indicators discussed in this article provide a small snapshot of the severe impact of the COVID-19 pandemic on the local economy, with many indicators recording extreme fluctuations over the June and September quarters. This highlights the critical nature of the monetary and fiscal policy changes implemented by the RBA and the Federal Government to support the economy post March 2020.

Looking ahead, the path to recovery remains uncertain with some industries faring better than others. As such, we are likely to see further coordinated policy responses from the RBA and state and federal governments, most likely in the shape of further targeted stimulus and accommodative monetary policy options.

Author: Danial Moradi

This information is provided by Lonsec Investment Solutions as a corporate authorised representative of Lonsec Research Pty Ltd who hold an AFSL number 421445. This is general advice, which doesn’t consider your personal circumstances. Consider these and always read the product disclosure statement or seek professional advice prior to making any decision about a financial product. You can access a copy of our financial services guide at

This video is provided by Lonsec Investment Solutions Pty Ltd ACN 608 837 583, a Corporate Authorised Representative (CAR 1236821) (LIS) of Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421 445 (Lonsec Research). LIS creates the model portfolios it distributes using the investment research provided by Lonsec Research but LIS has not had any involvement in the investment research process for Lonsec Research. LIS and Lonsec Research are owned by Lonsec Holdings Pty Ltd ACN 151 235 406.

Past performance is not a reliable indicator of future performance. This is general advice, which doesn’t consider your personal circumstances. Consider these and always read the product disclosure statement or seek professional advice prior to making any decision about a financial product. While care has been taken to prepare the content of this video, LIS makes no representation or warranty to the accuracy or completeness of the information presented, which is drawn from public information not verified by LIS. The information contained in this video is current as at the date of publication.

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