Australia's economic bounce-back from the COVID-19 pandemic has caught most economists and business operators off guard.

"Suppliers are flat out, operating 24 hours a day globally trying to supply the rest of the market," Apollo Joinery Group's managing director Peter Bader told The Business.

Apollo designs, manufactures and supplies kitchens for major developments, as well as individual homes.

The company has never been busier and has worked hard to keep up with demand amid ongoing supply chain disruptions and air freight capacity constraints.

Mr Bader said programs like the federal government's HomeBuilder, as well as the fact that people were stuck spending more time at home and were not spending money on overseas trips, had resulted in a renovation boom.

"COVID and the stimulus the government has afforded our industry has propelled the demand level over the foreseeable future, over the next 12 to 24 months," he said.

"That stimulus is bringing a lot of things to head for moving forward, which is providing a bit of confidence in the market space."

'Radical experiment surprises everyone'

Commonwealth Bank economist Gareth Aird said the pandemic and "radical" government response would see 2020 go down as "the most unique year to date in the history of the Australian economy."

"Government interventions in the economy were radical and the policy response was unparalleled," he said.

While Australia's economy still shrank 1.1 per cent overall in 2020, after suffering its first recession in nearly 30 years and steepest quarterly GDP fall in history, the rebound in the second half of the year also set records.

Gross domestic product (GDP) grew 3.4 per cent in the September quarter and by 3.1 per cent in the December quarter.

The strength of the resurgence in activity took economists by surprise, and it was the first time in the more than 60-year history of the National Accounts that GDP has grown by more than 3 per cent in two consecutive quarters.

Dr Brendan Rynne, KPMG's chief economist, said Australia was on course to be back to pre-COVID GDP levels by the middle of this year, if not earlier.

"That is an extraordinary comeback from the depths of mid-2020," he said.

"Confidence is returning and it seems the 'wealth effect' too is playing its part, which may be why the Reserve Bank is unconcerned about the surge in house prices."

Consumers open wallets at home

With international travel off the agenda and government payments boosting household incomes, Australians have both increased their savings and redirected their spending closer to home.

While the household saving rate fell to 12 per cent in December from 18.7 per cent in the September quarter, it is still roughly double what it was pre-COVID.

The fall in savings at the end of last year allowed household spending to jump by 4.3 per cent in the December quarter, with a further boost as Victorians came out of lockdown.

Small business owner Emily Dornbusch runs jewellery brand Emeldo in Rye, Victoria.

At the end of last year, as Melbourne eased out of its second lockdown and Christmas loomed, her online sales were up 20 per cent in the quarter compared to a year earlier.

She said the wholesale side of her business was strong throughout the pandemic, with demand for her product from new stockists.

"The 'support small business' thing throughout Australia was actually happening, so we were getting a lot of local stockists with smaller boutiques all through Australia," Ms Dornbusch said.

She suspects the relatively low price of her products meant they were still attractive to customers who had reduced incomes while receiving JobKeeper, for example.

As a result, she was able to hire two people part-time, to help with making the jewellery and fulfilling online orders.

Government cash splash boosts spending

The ABS data highlight just how much support the federal government's JobKeeper and boosting cash flow for employers schemes provided to the economy.

JobKeeper payments accounted for $11.9 billion in the December quarter, down from $35.8 billion in the September quarter.

Boosting cash flow for employers contributed $6.7 billion, down from $13.5 billion in the September quarter.

Spending on services jumped 5.2 per cent in the quarter as recreation and cultural activities, hotels, cafes and restaurants, and healthcare all continued to reopen and enjoy reduced restrictions.

Big ticket purchases also benefited, with a record 31.8 per cent surge in the value of car sales.

While spending on renovations increased by 5.2 per cent and new home construction by 3.4 per cent, thanks to HomeBuilder and record low interest rates.

Even though HomeBuilder is set to wrap-up at the end of March, Mr Bader is confident that his business will continue booming for months, and even years, to come thanks to demand for renovations and new builds.

Likewise, the momentum has not slowed down at the start of the year for Ms Dornbusch's business.

She said Emeldo's online sales, including wholesale, were up 89 per cent in January from a year ago.

Now, she and her family are doing what many have done since state borders have reopened, and are taking a holiday.

"It's good to get away, a few cancelled trips later and we're here, fourth or fifth time lucky I think," she quipped.