Australia is on the brink of its first recession in almost 30 years.
If it is negative (as is likely because of the downturn and the bushfires, but not guaranteed because of the surge in spending as Australians stocked up on essentials in March) and is then followed by another negative result in the June quarter (which is all but certain) Australia will be in what some people regard as a technical recession.
Data already released suggests it will be different in other ways; important ones with important implications.
It will be our first “service sector” recession.
Recessions are usually defined by large falls in investment; in new cars, new houses and new businesses.
As a result, in the early 1990s recession construction and manufacturing businesses were devastated. By contrast, employment in social services, education and food services continued to grow throughout the recession.
This time will be different.
Between March 14 and May 2 some 27% of the jobs in the accommodation and food services industry vanished, 19% of the jobs in the arts and recreation industry, and 11% of the jobs in professional and technical services – all well above the 6.5% and 7% of jobs lost in construction and manufacturing.
Jobs lost by industry, March 14 to May 2 ,
- ^ Wednesday (www.abs.gov.au)
- ^ technical recession (theconversation.com)
- ^ 20% (www.abs.gov.au)
- ^ Which jobs are most at risk from the coronavirus shutdown? (theconversation.com)
- ^ 27% (www.abs.gov.au)
- ^ 6160.0.55.001 - Weekly Payroll Jobs and Wages in Australia, Week ending 2 May 2020 (www.abs.gov.au)
- ^ Unlocking Australia: What can benefit-cost analysis tell us? (theconversation.com)
- ^ Look beyond a silver bullet train for stimulus (theconversation.com)
Authors: Isaac Gross, Lecturer, Monash University