CANBERRA, AAP – Business activity in December was much weaker than hoped, driven by staff shortages, supply chain disruptions and weakened consumer confidence as a result of the Omicron variant.
Credit reporting agency CreditorWatch now expects trade activity to slide throughout the first half of 2022.
Its business risk index report for December said Christmas trade activity was the lowest on record, down 45 per cent from December 2020.
“Everyone was expecting that the rapid spread of Omicron would have a significant adverse impact on Christmas trade, but few would have predicted it to be this extreme,” CreditorWatch CEO Patrick Coghlan said.
“You can’t blame people for wanting to stay at home. We can only hope that the peak arrives soon, and the business community can get back on its feet.”
However, its business risk index – which gauges the probability of default over the next 12 months – was down slightly in December at 5.7 per cent compared with 5.79 per cent in November.
The index covers 300 regions across the country.
Newcastle and Perth were the two metropolitan centres that have bounced back the strongest from the pandemic, compared with Melbourne which continues to struggle from the extended lockdown in 2021.
More broadly, defaults, external administrations and court actions all dipped in December after sharp rises in November.
“The Australian economy undoubtedly bounced back in the December 2021 quarter and carries some momentum into 2022 but it is enduring a bumpy ride as Omicron bites,” the report says.
“With such high vaccination rates we will push through, but many SMEs have been hit hard.”