SYDNEY (Reuters) – One in three Australians reported a deterioration in household finances in the month to mid-April, an official survey showed on Friday, as the COVID-19 pandemic shut businesses and forced many people into the unemployment queue.
The Australian Bureau of Statistics (ABS) survey on the impact of the pandemic on households was focused on financial and psychological stress, stimulus payments and changes to work.
It showed as many as 31% of respondents saw a deterioration in finances from mid-March to mid-April, with 14% reporting an improvement. No details were provided on the improving finances.
The survey highlights the challenges facing policymakers who have gone all in to blunt the economic shock from the containment measures aimed at curbing the spread of the virus.
The federal government has pledged spending more than 10% of GDP, including a A$130 billion ($83.94 billion) subsidy to employers to keep staff they might otherwise have let go.
Still unemployment is expected to top 10% by June while Australia’s central bank expects the country to plunge to its worst economic contraction since the 1930s in the first half of this year.
In the ABS survey, about 8% of respondents said they lacked the money to pay one or more bills on time and 10% of households drew on their savings to pay for basic living expenses – the most common response to coping with financial stress.
The second most common was reducing loan payments.
More than a third of Australians have a mortgage, suggesting that almost 10% of them could have reduced their repayments, analysts at National Australia Bank said in a note.
The ABS didn’t provide an update on job losses, but noted 6% were working fewer hours since the end of March and 12% of adults had a change in their work.
Figures released by Australia’s Department of Social Services on Thursday showed a record spike in the number of people on welfare benefits as well as a large backlog o unprocessed claims.
The number of unemployment benefit recipients surged from 0.8 million at the end of 2019 to 1.3 million by April 24, with most of the increase seen from the second half of March when containment measures were tightened.
“We used these data to construct a version of the unemployment rate,” NAB economist Kieran Davies wrote in a note.
The official unemployment figures from the Australian Bureau of Statistics can differ from the number of persons on benefits, Davies said.
“However, on the strong assumption that the official rate shows the same change, the unemployment rate would increase from 5.1% in February to 8.8% in April.”
Reporting by Swati Pandey; Editing by Shri Navaratnam