(Bloomberg) -- Melbourne’s renewed lockdown and nighttime curfew are wiping out the recovery that was underway and risks broader erosion across Australia that could discourage households from spending and firms from hiring or investing.
A cross-section of higher-frequency indicators highlight Victoria’s parlous position and point to spillage into Sydney, risking a derailment of the economic recovery as tighter restrictions and fear cause activity to slow.
The gauge of weekly household sentiment plunged as Australia locked down, and rebounded in a V-shape as restrictions were lifted in May and the economy reopened earlier-than-expected. Confidence has since pulled back as outbreaks escalated, suggesting a nervousness across the nation that the virus’s re-emergence could threaten households and firms, which only recently returned to work or reopened their doors.
CityMapper, a public transit and mapping app that tracks users’s movements shows mobility in major metropolises across the world. It has Melbourne fourth lowest on its global list with activity at just 12% of typical pre-Covid levels.
Sydney has seen activity return to only around one-third of its pre-virus level. Hot spots in the city, along with Victoria’s deterioration, have stifled recovery.
With people still nervous about potential infection on public transport, car usage has picked since the first lockdowns were lifted. In Sydney, people are actually driving more than they did pre-Covid, according to according to Apple Inc.’s Mobility Trends Report, which reflects usage of its Maps app.
Melbourne traffic remains well below its typical level and its new 8 p.m. to 5 a.m. curfew and the 5 kilometer restriction on travel from home should cause further declines.
Unsurprisingly, restaurant bookings have gone deep south, collapsing in Melbourne, which had been in lockdown for three weeks already before restrictions this week were further tightened and the nighttime curfew was introduced.
Sydney also shows signs of mounting fear, particularly as the community spread of Covid-19 has been traced to restaurants and dining venues. Sydneysiders, in turn, are choosing to again stay home.
Government stimulus payments to households and firms, combined with fewer options for spending amid shutdowns, have swelled Australians’ bank accounts. Credit card balances are tumbling in response, accelerating a trend that was already underway. This is no bad thing in a country with one of the developed world’s highest levels of household debt.
©2020 Bloomberg L.P.
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