Business credit defaults and liquidations are rising sharply, credit bureau Centrix says.
According to the latest monthly Centrix Credit Indicator, company liquidations rose 25% in September year-on-year, reaching 306. That's the highest monthly total in a decade. The previous biggest months for liquidations this year were March, when 238 were recorded, and 233 in May.
For the September quarter the biggest portion of liquidations came from the construction sector with 199, or 28%.
"Over the past year, property operators, residential building construction and cafes/takeaway food companies have been the most likely to be placed in liquidation," Centrix says.
"Looking at the hospitality sector, the last 12 months has seen a 34% increase in company liquidations from this sector, with cafes, coffee shops, restaurants, pubs, and clubs particularly badly hit."
It says hospitality businesses are more than two times more likely to fail than the typical New Zealand business. With more than 30,000 registered companies, hospitality businesses comprise 4% of all registered NZ companies.
Over the last 12 months there were 212 hospitality companies placed into liquidation, up from 158 for prior equivalent 12 months. Centrix says, however, hotels, accommodation, and catering services are showing small signs of improvement, with lower levels of credit defaults and company insolvencies in recent months.
Business credit defaults, meanwhile, are higher across the board, up 16% year-on-year.
"The transport industry is the worst affected, with credit defaults up 35% year-on-year, closely followed by the construction sector with credit defaults up 33%. The retail industry is faring the best out of the industries measured, with credit defaults up 3% year-on-year," says Centrix.
In terms of consumer debt arrears, Centrix says the number of people behind on payments dropped 3,000 month-on-month in September to 458,000. That's equates to 12.12% of the credit active population, is 3.5% higher year-on-year, and just above 2018 levels. The number of consumers with loans 30+ days past due is 156,000, of which 74,000 are 90+ days in arrears.
Mortgage arrears rose slightly in September, with 21,200 home loans - or 1.41% - past due. At 21,200, it's a 13% year-on-year increase, Centrix says.
Meanwhile, Centrix says 13,300 consumer accounts are reportedly in financial hardship. This data is provided to Centrix by banks, non-banks, telco and utility providers, with them notifying Centrix if one of their customers has been approved for financial hardship assistance.
"Although this [13,300] is a decrease of 400 in the last month, financial hardship cases overall have been rising since November 2022. Year-on-year the number of financial hardship accounts are up by 19%, although the rate of this growth is subsiding. Of these hardships, 47% relate to mortgage payment difficulties, 29% to credit card debt and 15% to personal loan repayments. The highest rates of financial hardship are observed close to the Auckland and Wellington main centres."
Centrix Managing Director Keith McLaughlin says arrears are expected to rise over summer, in-line with festive season spending and wider seasonal trends.
*The charts below come from Centrix.
26 Comments
Yes, and what's more, Mainzeal had a director with outstanding construction qualifications and experience: as an ex-kindergarten teacher with a two year tenure as prime minister. And didn't a Chinese director of Mainzeal abscond back to China with $60 million from Mainzeal's coffers....does anybody know if that was ever repaid?
I wonder how much of that $240m is buried somewhere.
Actually, we could ask Chris to answer the question I put to him.
He claimed to have learned of resource depletion issues (which will drive a lot more discretionary-spend unwinding, before the whole shebang goes belly-up) at economics lectures. I asked how they suggested the issue was equated with economic growth - indeed with the never-bigger collection of bets-on-the-future?
There was silence from Chris. Sure, that mimics the economics profession (with a few acknowledged exceptions) and its reporting media (ditto) - but he did challenge me; seemed to be putting my posit - that we are traversing the physical Limits to Growth - down, by claiming his classes had included discussion of such things.
I'm guessing that they went no further than the: at a certain price-point, an alternative will be found' level. Certainly, Andrew Coleman's recent series suggests that; what underwrites Kiwisaver expectations? Or indeed any 'financially' held forward bets on physical availability.
There will be a lot more closures/failures, in the near term, not just in NZ. Discretionary is perhaps the most-risky arena to be playing in, but for a growing cohort - owing and facing either reduced income (or none) - even being in 'essential' areas might be fraught.
@ Chrisofnofame - You give way too much credit to "that rich & sorted fellow". He & his crew have only been governing for just 11 months. They can't undo the damage of the last lot in just 11 months. They're not that good.
They are navitgating their way through one of the largest global recessions of our time. The last lot navigated their way through a global pandemic with a string of constant failures long after the pandemic had been & gone, yet their decieved voterbase was screaming out for people to "be kind" & "have a little patience".
Have a little patience Chris. While the last lot couldn't even define what a woman is because basic biology stumped them in their tracks, the current lot have a lot more complex problems they're trying to navigate. "Let's do this".
"We know this news comes on top of other price increases and are conscious this is a tough time for many Kiwi businesses.
"Over the last year we've been impacted by cost increases in several areas, such as wholesale prices, transmission and distribution costs and we are now passing some of these costs on."
It is not in Genesis' (or anyone in energy-delivery) interest, to game the system.
Money has always been underwritten by energy, although it has always been reported invertedly.
The EROEI of energy going into the global system has been dropping ever-more-rapidly, and the never-bigger collection of infrastructure - including generation/distribution, has never been older, or more complex (both requiring more energy to parry/maintain).
The energy cost of energy has been rising for years - which is incidentally why it has taken more than $1 of debt to 'generate' (ironic pun) $1 of GDP.
This trend will continue - inflation in the face of scarcity is inevitable, unless demand destruction turns it into stagflation.
It’s because we’re subjected to the worst reckless govt in modern history. Directly & indirectly causing tens of thousands of job losses then they grizzle about rising unemployment, along with cancelling everything the previous govt implemented irrespective whether it is working well
No, it is not.
I am no fan of the 3-Clown circus, or of where they are headed. And I'd rather have empathetic people in leadership roles, than... this less empathetic mob.
But BOTH are in trouble for the SAME reason (and the shouting was needed; it's a reaction to failure to hear).
We are traversing the (physical) limits to growth now, and the bets laid on the way up - particularly those laid using a money-is-always-a-store-of-value lens - are falling increasingly short of expectations. Measurement in keystroke-issued proxy - of which it takes more keystroking than 'value' now and getting worse - is increasingly invalid.
Hint - 'Job-losses' is part of the becoming-irrelevant vernacular. 'Amount of energy, fossil, renewable or human, being allocated' would be a better measure.
You are, however, correct re ideological reaction - this lot are worrying in that they tell us that when a falsehood is peddled beyond its discovered-to-be-false date, only those who need the truth not to be true, will offer to lead on further into the void. That tends to favour folk inclined to 'blinkered belief' - a type common in the religious rump. The other lot have yet to grasp the scale of degrowth required, and the incompatibility of becoming elected if telling the truth (others are in the same boat :)
Just remember that energy and the resources it extracts, processes and delivers - are the basis of all wealth. They are retreating, and per-head that retreat is faster, obviously - so 'cost' of everything, including energy, will continue to rise. Unceasingly - this isn't a temporary COL crisis; it's permanent. Business models - Genesis included, are in trouble - although we can presume essentials will outlast discretionary.
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