Australian governments may have to further dip into their pockets to support companies through the coronavirus pandemic as businesses confidence tumbled even before Melbourne went into lockdown.
Consumer confidence is also in a tailspin, posting its seventh week of decline and pointing to greater restraint on household spending.
Business confidence tumbled 14 points into negative territory in the National Australia Bank’s monthly survey for July.
In contrast, the survey – which is closely monitored by the Reserve Bank – showed business conditions rose eight points, with trading and profitability back in positive territory and employment continuing to improve.
“Businesses will remain very cautious given the great uncertainty around the virus at the moment,” NAB chief economist Alan Oster said.
“The business sector will require ongoing support through the recovery phase until the economy can get back on its feet.”
Separately, Australian Bureau of Statistics figures reveal while the number of jobs in Australia held relatively steady through July, Victoria dropped another 1.5 per cent.
Nationwide payroll jobs declined 0.1 per cent, leaving them 4.5 per cent down since March, when Australia recorded its 100th confirmed COVID-19 case.
“Around 40 per cent of jobs lost in Victoria by mid-April had been regained by June 25, but by the end of July this had reduced to 24 per cent,” ABS head of labour statistics Bjorn Jarvis said.
The weekly ANZ-Roy Morgan weekly consumer confidence index dropped 2.4 per cent to its lowest level since late April.
“Not surprisingly, confidence is weakest in Melbourne,” ANZ economist David Plank said.
The downturn in confidence is now longer than the six weeks of continuous decline during the first wave in February and March.
However, the descent is less severe than earlier in the year.
The latest Essential Research survey found people are more concerned about their health than the economic outlook.
In a list of issues deemed most important, almost two-thirds thought stopping the community transmission of COVID-19 as soon as possible was the top priority.
Just over half thought it was managing the economy.
The monthly labour force report is due on Thursday, which economists expect will show the jobless rate rising to a 22-year high of 7.8 per cent in July, compared with 7.4 per cent in June.
Last week, both the Reserve Bank and Treasury revised up their forecasts for unemployment to 10 per cent by the end of the year.
RBC Capital Markets head of strategy Su-Lin Ong said the outlook for the labour market remained challenging in an uncertain and fragile recovery.
“Recouping the 870,000 jobs lost over March/April will be a Herculean effort,’ Ms Ong said in a note to clients.
“Renewed restrictions and heightened uncertainty will have a more enduring impact upon confidence and, accordingly, longer-term implications for hiring.”