Consumer confidence has slumped due to the rapid spread of the Omicron variant and the immense strain this has put on testing facilities.
The ANZ-Roy Morgan consumer confidence index - a guide to future household spending - tumbled 7.6 per cent in the past week to its lowest level since October 2020 at 97.9 points.
ANZ head of Australian economics David Plank noted confidence is even lower than during last year's Delta outbreak which put half the population in lockdown.
"Consumer confidence readings are usually positive during the month of January and the level of 97.9 is the weakest January result since 1992, when the Australian economy was experiencing sharply rising unemployment," Mr Plank said.
However, he doesn't think the economy is as weak as the data might suggest, but says the result shows concerns about COVID have the potential to significantly impact the economy if they linger.
Subindices of the confidence survey for views on the economy and personal finances all fell, with 19 per cent expecting to be "worse off" financially this time next year, the highest level since September 2020.
Prior to the Omicron outbreak, which has seen tens of of thousands of Australians infected each day and a spike in fatalities, the economy was rebounding smartly after last year's lockdowns.
New data released by business and employment online operator LinkedIn showed hiring on average as of the December quarter was 16 per cent higher over the year compared to same pre-COVID period.
This came as virus lockdowns were gradually lifted in NSW, Victoria and the ACT.
"However, there remain risks to the recovery given the emergence of the Omicron variant," LinkedIn warned.
Even so, it expects the labour market to tighten in coming months with job seekers in the driver's seat and in a better position to negotiate employment terms.
There are already signs that job seekers are becoming more selective in terms of there being fewer applications per job, down 63 per cent compared to 12 months earlier.
"In order to attract and retain top talent, current and potential employers alike will need to focus on what workers want - strong culture, clear career paths, and flexibility," LinkedIn says.
It believes remote forms of work will become a permanent feature of the labour market after gaining traction in the early stages of the pandemic in 2020.
Separately, figures from employment platform SEEK showed job advertisements declined 3.2 per cent in December, but were still 39 per cent higher than a year earlier.
SEEK's sales and service director Stephen Tuffley said December and January are typically slow-moving months in the jobs market.
"As businesses and employees return from the holidays, we expect to see movement in both ads and applications," he said.
"Looking at the first 10 days of 2022, there have been more jobs posted to the site than in the same period in the past three years."
The Australian Bureau of Statistics will release labour force figures for December on Thursday.
Australian Associated Press