Business Indicators, Business Impacts of COVID-19

This publication provides information on the incidence and nature of impacts due to COVID-19, as experienced by businesses operating in Australia. The survey was conducted between 22 April and 28 April 2020.

Topics covered in this release include:

• Business response to the JobKeeper Payment scheme;
• Anticipated adverse business impacts due to COVID-19;
• Business capital expenditure intentions.
   

The collection was conducted through a telephone based business survey between 22 April and 28 April 2020, with a sample size of 2,014 businesses. The final response rate was 60%.

This release forms part of the suite of additional products that the ABS is producing to measure the economic impact of the COVID-19 coronavirus. Future information collected in this survey will evolve to maintain relevance in a changing environment.

More than two in five businesses (44%) reported that the announcement of the JobKeeper Payment scheme influenced their decision to continue to employ staff.

A greater proportion of small (0-19 persons) and medium businesses (20-199 persons) (both 45%), compared to large businesses (200 or more persons employed) (32%), reported that the JobKeeper Payment scheme influenced their decision to continue to employ staff.

Businesses in Accommodation and food services were the most likely to report the JobKeeper Payment scheme having influenced their employment decisions (67%).

Three in five businesses (61%) reported having registered or intending to register for the JobKeeper Payment scheme.

By business size, 61% of small, 60% of medium and 45% of large businesses reported having registered or intending to register for the JobKeeper Payment scheme.

The area of each segment in the diagram below shows the relative share of each industry division of total jobs. The figures within the segments represent the proportion of businesses in each industry that have registered or intend to register for the JobKeeper Payment scheme.

a. ABS Cat. No. 6150.0.55.003 - Labour Account Australia, Quarterly Estimates, December.
b. Proportions are of all businesses.

Four in five businesses in the Construction industry have registered or intend to register for the JobKeeper Payment scheme; this industry represents 8% of total jobs in the economy. By contrast, while the Health care and social assistance industry has the highest share of total jobs in the Australian economy (13% of total jobs), less than half of all businesses in this industry reported having registered or intending to register for the JobKeeper Payment scheme.

Of those businesses that do not intend to register for the JobKeeper Payment scheme (33% of all businesses), the most common reason reported was that the business does not meet the eligibility criteria (55%); large businesses were most likely to report not meeting the eligibility criteria (81%).

By business size, small businesses were most likely to report insufficient cash flow (8%) as a reason for not intending to register for the JobKeeper Payment scheme.

By industry, of those businesses that do not intend to register for the JobKeeper Payment scheme:

• businesses in Education and training (97%) were the most likely to report that the business does not meet the eligibility criteria;
• three in five businesses in Arts and recreation services (58%) reported that none of their employees meet the eligibility criteria;
• a quarter of businesses in Education and training and Information media and telecommunications (both 24%) reported that they do not have sufficient cash flow to continue paying staff before JobKeeper payments commence; and,
• difficulty in understanding the eligibility criteria was most likely to be reported by businesses in Other services (19%) and Accommodation and food services (19%).
   

A range of additional comments were provided by the 33% of businesses that reported that they did not intend to register for the JobKeeper Payment scheme. Presented below are comments from those that reported that their business was not eligible. The bigger and bolder words reflect the more common themes identified by businesses.

Of businesses that reported having registered or intending to register for the JobKeeper Payment scheme:

• 44% expected all of their employees to be eligible for the scheme;
• 29% expected more than half their employees to be eligible for the scheme; and,
• 21% expected less than half of their employees to be eligible for the scheme.
   

Of businesses registered or intending to register for the JobKeeper Payment scheme, 46% of small businesses, 13% of medium businesses and 7% of large businesses reported that they expected all of their employees to be eligible for the scheme.

Industries with the highest proportion of businesses that expected more than half their employees to be eligible for the JobKeeper Payment scheme were:

• Information media and telecommunications (99%);
• Finance and insurance services (97%); and
• Electricity gas water and waste services (96%).

Seven in ten businesses reported that reduced cash flow (72%) and reduced demand for goods and services (69%) are expected to have an adverse impact over the next two months.

This compares to two thirds of businesses reporting reduced demand for goods and services (64%) and reduced cash flow or turnover (66%) in the March Business Impacts of COVID-19 survey.

Two in five businesses reported that they expect uncertain financial markets as a result of COVID-19 to have an adverse impact on business in the next two months; several businesses commented that this uncertainty was specifically related to the value of the Australian dollar and commodity prices.

More than half of all businesses in the Wholesale trade (66%), Retail trade (59%) and Manufacturing (59%) industries reported that supply chain uncertainty was expected to have an adverse impact on business. Several businesses commented on expected logistical issues due to inter-state travel restrictions & border closures.

Government restrictions such as social distancing measures have had a significant impact on the operating environment for businesses in Accommodation and food services. In the March Business Impacts of COVID-19 survey nine out of ten businesses in Accommodation and food services reported that government restrictions had an adverse impact on operations. Businesses in this industry are anticipating that these restrictions will continue to have an impact in the next two months; with 84% reporting that Government restrictions were expected have an adverse impact on their business in the next two months.

Businesses selected in this survey are a sub-sample of the March Quarter 2020 New Capital Expenditure Survey; the New Capital Expenditure Survey collects information about businesses future capital expenditure intentions. Capital expenditure expectations data is one leading indicator of business confidence.

Presented below is preliminary information about business capital expenditure intentions for the 2020-2021 financial year.

a. The intended capital expenditure change was calculated using businesses in the Business Impacts of COVID-19 survey sample which were selected in both the December 2019 and March 2020 quarters of the New Capital Expenditure Survey.
b. 5 year averages are calculated based on responses to December and  March quarter, New Capital Expenditure Survey for each year 2015-16 to 2019-20.

Of those businesses that revised down their 2020-21 capital expenditure forecast between December 2019 and March 2020:

• 54% reported a reduced ability to pay operating expenses;
• 72% reported decreased cash flow;
• 25% reported reduced access to credit or additional funds.
   

Of those businesses that revised up their 2020-21 capital expenditure forecast between December 2019 and March 2020:

• 22% reported a reduced ability to pay operating expenses;
• 66% reported decreased cash flow;
• 18% reported reduced access to credit or additional funds.
   

The above estimates on capital expenditure intentions are based on preliminary data from the March quarter 2020 New Capital Expenditure Survey. Estimates from this survey will be released on 28 May 2020 (cat. no. 5625.0).