Despite the huge drops in sales, company operating profits soared by a record 15 per cent with the bureau reporting this was due to subsidies such as JobKeeper and the government’s cashflow for employers program.
The sales fall, however, has been reflected in wages and salaries which suffered a record 3.3 per cent drop in the quarter.
The worst hit state was Queensland where total wages fell by 5 per cent. They were down by 4.3 per cent in the Northern Territory, by 4.2 per cent in Victoria and by 3.1 per cent in NSW.
A 7.2 per cent contraction equates to $34 billion, taking quarterly GDP back to where it was in June 2016.
A separate household survey from the ABS found that by mid-August about 14 per cent of Australians were receiving the JobKeeper payment.
Of those, 64 per cent were receiving less than their normal pay while another 22 per cent were getting about the same.
While JobKeeper has channelled more than $40 billion back into the economy, there are signs households are now starting to struggle despite the financial support.
The number of people who said they would be able to raise $2000 in a week for something important fell to 77 per cent, down from 88 per cent in mid-June.
The proportion of Australians unable to raise $500 within a week doubled to 6 per cent in mid-August. The bureau also found a drop in the number of people who believed they could pay a bill in the next three months, down to 87 per cent from 94 per cent.
The federal government is hoping to reduce the JobKeeper payment from late September although extend the scheme into the March quarter of next year.
The Reserve Bank board meets on Tuesday with markets expecting it to hold the official cash rate at a record low of 0.25 per cent.
RBA figures on Monday showed private sector credit fell 0.1 per cent in July with business credit slumping another 0.6 per cent.
Commonwealth Bank senior economist Kristina Clifton said demand for new loans was very weak with businesses unwilling to invest as the future was so uncertain.
“The private sector is de-leveraging and both monetary policy and fiscal policy will need to stay loose to help smooth the adjustment,” she said.
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Shane is a senior economics correspondent for The Age and The Sydney Morning Herald.