Canberra's economy cushioned by public sector pandemic spending

The local economy has been cushioned by the unprecedented public sector response the pandemic has required, and a 4.4 per cent growth in government spending.

A drop in household consumption is the major driver of Australia's economic woes, and in the ACT households slashed their spending by 11.6 per cent, behind larger drops in NSW, Victoria and Tasmania.

Spending on alcohol in the capital in the June quarter jumped to $88 million, up from $76 million in the March quarter.

Canberrans also spent $242 million on household goods and furniture - an increase of $11 million.

Just $9 million was spent on transport services - down from $115 million the quarter before.

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The pain in the city's once-vibrant hospitality scene is evident, with just $186 million spent at restaurants, cafes and hotels, down from a record high of $428 million in the June quarter a year ago.

While the national economy is in recession, the ACT economy is not, after it grew by 2.6 per cent in the March quarter.

NSW and Victoria, states hit hardest by the pandemic, have also recorded the deepest economic impact, with drops of 8.6 per cent and 8.5 per cent respectively. Tasmania was hit next hardest with a 7.4 per cent drop.