Australia’s bosses and consumers are expressing some resilience in the face of the Omicron outbreak, despite the disruption this COVID-19 strain is causing the economy.
The monthly Westpac-Melbourne Institute consumer sentiment index eased just two per cent in January.
“This is a surprisingly solid result given the rapid spread of the Omicron COVID variant over the last month,” Westpac chief economist Bill Evans said.
It compares to the 5.2 per cent drop seen in the first month of the Delta outbreak in NSW, a 6.1 per cent drop heading into Victoria’s “second wave” outbreak in 2020 and the epic 17.7 per cent collapse when the pandemic first hit in early 2020.
However, responses did show a deterioration during the course of the survey between January 10 to 14, which Mr Evans suggests indicates some increased anxiety as the week progressed.
While consumers’ near-term expectations for the economy showed the biggest fall, they were also not confident about the outlook for their finances over the next 12 months.
“That nervousness would be consistent with the sharp deterioration in the economic outlook but may also reflect shifting expectations for interest rates,” Mr Evans said.
In January, 55 per cent of respondents expected mortgage interest rates to rise over the next 12 months, compared with 41 per cent when asked in August and 36 per cent a year ago.
A separate survey conducted by employment specialist Robert Half found almost three-quarters of respondents were confident about their growth prospects in 2022 compared to 2021.
While the survey was undertaken in November and December and prior to Omicron being felt, Robert Half director Nicole Gorton said the past two years of COVID-related disruption have strengthened businesses’ organisational agility and adaptability,
“Australian businesses are generally well prepared to weather the latest COVID outbreak while continuing to pursue their strategic priorities for the year,” she told AAP.
Four out of five of the 300 hiring managers polled, including chief financial officers and chief information officers, intend to hire permanent staff this year, although half expect this to be more challenging than prior to the pandemic.
“Even with the gradual return of international migration this year, the shortfall of skilled talent entering the market over the past two years will take at least the same amount of time to recover, if not more,” she said.
Ms Gorton says the fierce competition for skilled staff has put job seekers in the driver’s seat for commanding better remuneration and benefit packages.
The survey found almost two in five bosses identify meeting candidates’ salary expectations to be their main challenge.
However, economists are now less certain about the outlook from here due to the impact of Omicron, which has seen a massive spike in COVID-19 infections and deaths, and led to a further upheaval of supply chains.
While Commonwealth Bank group economists expect unemployment to remain low, they have cut their economic growth forecast for the March quarter to one per cent from a pre-Omicron outbreak estimate of 2.3 per cent.
“With a peak in new cases not expected for several weeks, production, hours worked and consumption will all take a hit in the March quarter,” Commonwealth Securities senior economist Ryan Felsman said.
Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)