Credit bureau Centrix says New Zealand company liquidations are continuing to rise, with a 36% increase in the June quarter year-on-year.
The news, contained in the latest monthly credit indicator report from credit bureau Centrix, backs up the general impression of the Kiwi economy doing it tough during the June quarter. Economists expect GDP shrank in the quarter and, indeed, the Reserve Bank is forecasting GDP fell 0.5%. The GDP figures for the June quarter are released on September 19.
Centrix managing director Keith McLaughlin says there were 642 company liquidations in New Zealand in the June quarter 2024, up from 470 for the same period in 2023.
Auckland contributed 383 liquidations in the second quarter, which was up from 288 at the same time last year.
McLaughlin said over the past year, the manufacturing sector has been particularly impacted and has seen a 15% rise in liquidations, with furniture and fabricated metal manufacturers suffering the most.
There were 120 manufacturing companies placed into liquidation during the year, compared to 104 liquidations in the prior 12-month period.
"This trend points to signs the industry is facing continual challenges with falling new orders and low production as domestic demand remains weak," he said.
"As we move into the warmer months, it’s clear challenges will likely persist for both New Zealand consumers and businesses.
"It’s vital those seeking to plan effectively for their future seek out advice from trusted advisers early to not only survive to 2025, but to thrive through to next year and beyond."
However, McLaughlin says looking at the wider credit story across the country, a more mixed picture emerges.
"Over the month of July, consumer arrears have continued to ease, with the number of people behind on their payments falling to 456,000, down 9,000 month-on-month. This is reflective of improved consumer sentiment in the face of lower interest rates and anticipated further reductions.
"Meanwhile, overall consumer credit demand is down 3% compared to last year, with auto loan demand dropping by 22% as new car sales continue to decline.
"Credit card applications are up 5% from last year but remain 40% below 2019 levels."
McLaughlin said mortgage delinquencies improved slightly in July, with 21,000 home loans now reported as past due, down 500 from last month.
"However, this is still up 12% year-on-year, while mortgage demand also remains subdued overall with application enquiries down 1.5% year-on-year.
"It’s clear Kiwis are still struggling in the face of the ongoing cost-of-living crisis, with financial hardship cases up 27%, sitting at 13,850 for July.
"In saying this, it is positive to see so many consumers taking responsible steps to deal with their financial struggles, before they find themselves in a bad debt emergency."
24 Comments
Hard for an economy carrying so much debt as dead weight to achieve soft landing. The newsrooms are still reporting layoffs in several industries - KPMG NZ to cut 50 jobs in consulting
Ministries and departments completed their first round of layoffs set by the government and now have further instructions of delivering 10% in budget cuts. The sector is expected to be 20% leaner from when National took over.
Nothing to show for it? Tell that the to the people with those billions sat in term deposits - or the pension and investment funds holding the bonds!
Depends. If you used this abnormal period pay down debt v.s. tripling down on more debt, extra car and or bach, even banked some saving etc, then you are probably doing ok. If you went full monte on debt suger rush, thinking this was normal, then yes you have stuff to work through.
Some investment guy said domething about doing the opposite of everyone else.
We now observe the economic destruction from abroad having opted to leave NZ during the mid period of Labour's frenzied, never to be forgotten, leadership.
My hearts go out to all those small businesses, owners and staff, who are being slaughtered.
NZ will recover, at some stage, if history is any guide. The question is would I want my own children to invest in a location that seems to exemplify poor leadership in cycles???
Valid points.
The fortune appears to be the sugar rush - Aus equals Iron ore, e.g. - which begs the question, will that be any better when the ore price crashes?
Maybe Singapore? Although I gather locals got somewhat perturbed when the Govt set an optimal population target.
I guess you've partially summed up how the government doesn't necessarily have as much to do with a country's fortunes as they'd like to make out. They can't make much impact on birth rates, natural resources, etc. They mostly meddle.
Singapore is very well run (relatively speaking). Although they do benefit from geography, and being a relative first mover in the region, allowing them to dominate a few service sectors.
There's no way I'd want to live there though.
People bring up Singapore a lot, when it's an incomparable nation to NZ. Such a very different set of circumstances.
Also, as you've mentioned, I wouldn't want to live there apart from maybe a few years as a young professional with no children, that'd probably be pretty cool. Could say that for most half decent countries though.
It's very hard to find a comparable nation to NZ, which is why many analogies don't transfer.
- miles away from most markets
- low population
- population is a hodge-podge of peoples without much in the way of dominant or embedded culture
Although for me (and others I'd assume), those are part of it's appeal.
Also, as you've mentioned, I wouldn't want to live there apart from maybe a few years as a young professional with no children, that'd probably be pretty cool
You still need something to offer. S'pore has long been full of overpaid Western expats - usually white - many of whom seem to be on an extended holiday in the tropics. If you're relying on a steady line of patter to differentiate yourself, Dubai might be a better option.
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