Australian businesses in distress from covid-19

The ABS is now compiling a new set of releases to track the impact of the covid-19 outbreak on the Australian economy. In a report released by the Bureau today, from a sample of 3,000 businesses, nearly 1 in 2 respondents (49%) had noted an adverse impact by mid-March, while 86% of firms expected to be impacted in the months ahead. Note that these results largely are based off responses that came through before the implementation of stricter social distancing and other containment measures that will effectively suspend activity in a number of industries through closures and cancellations. 

The chart, below, provides an industry breakdown showing the percentages of respondents already reporting an impact by mid-March, as well as an expected percentage of firms anticipating to be hit by covid-19.    

Source: ABS

By mid-March, 78% of responding firms operating in the accommodation and food services industry had been impacted, while 96% of businesses foresaw an upcoming hit. Since the survey was completed, greater travel restrictions have been put in place, while cafes and restaurants (outside of takeaway options) have been ordered to close their doors. One industry that looks to be underrepresented in this survey is real estate following Tuesday night's announcement from Prime Minister Morrison that open house inspections and auctions are now prohibited.   

The types of impacts, both experienced and expected, reported by firms are summarised in the chart, below. The key theme highlighted here is that the covid-19 outbreak is both a demand and supply-side shock to the economy, which is only accentuated by the palpable level of uncertainty over the outlook.    

Source: ABS

As per the chart, below, the impacts of covid-19 are being felt by businesses of all sizes. Fiscal stimulus measures to date have been targeted at small and medium-sized enterprises as these types of firms employ the majority of the workforce. 

Source: ABS

In other analysis, the ABS reported that firms' responses around expected impacts from covid-19 were largely in line with the unsettling news flow from the past few days relating to themes of closures of businesses, job losses and cash flow concerns.