Welcome to the October edition of our Latest Industry Risk Indicators, providing a snapshot of how New Zealand’s trade-related and construction sectors performed through August.
August was a steady month. Sales kept climbing, arrears edged back down after two small lifts, and fewer businesses went ‘bad’ than a year ago. Over recent months CreditWorks has also added new member data across several sectors, including plumbing and pipe supply, energy and resources, food and beverage manufacture, and joinery. This gives a wider and more complete view of the market, and where it lifts growth rates noticeably, the like-for-like figure is shown alongside the headline.
- Rolling annual sales grew again, with nominal sales up 1.9% month-on-month and 16.4% year-on-year. Adjusted for inflation, sales lifted 1.6% for the month and 12.6% on the year. Roughly a third of annual growth reflects newly acquired data. Like for like, growth would be around 10.3% nominal and 6.7% after inflation.
- Total debt under company debtors was 20.6% higher year-on-year, with fuel-price effects accounting for around 12% of that growth and other sectors also gaining momentum.
- Arrears improved marginally. 60-day-plus arrears eased 2bps to 2.91% (down 89bps year-on-year) and 90-day-plus eased 6bps to 1.61% (down 67bps year-on-year).
- All three main centres improved. Wellington eased 37bps to 4.74%, Christchurch 13bps to 2.92% and Auckland 12bps to 3.13%. The other regions combined rose 20bps to 2.17%, still 3bps below last August.
- The rolling annual volume of winding-up applications rose 2.2% month-on-month and was 17.9% higher year-on-year, a gradual build in insolvency pressure that picked up slightly from July.
- Debtors going ‘bad’ (defaults, judgments and liquidations) fell 0.6% month-on-month on a rolling annual basis and were 1.3% lower than August last year.
- Construction consents softened, with the trend in seasonally adjusted new dwelling consents easing 1.2% in August, though the year-on-year position remains favourable. South Island consents are 45.1% above their December 2019 level, while the North Island is within 1.7% of it.
- Sales growth was strong across every major debtor industry, led by Concrete & Steel (+31.1% year-on-year), Plumbing & Electrical (+23.8%, or around 20.7% like for like), Retail (+22.7%), Food & Beverage (+22.5%) and Manufacturing (+18.5%). Construction grew 10.3%.
- Construction remained the arrears outlier at 5.39% against an overall rate of 2.91%, though it improved 15bps over the month and is 208bps lower than a year ago. Concrete & Steel rose 103bps to 4.46%, largely due to a single Auckland debtor.
- Vendor-side payment behaviour was mixed. Residential Builders paid notably faster, with days sales outstanding down 12.9% to 38.9 days, and Electrical Supply Merchants are 7.0% faster than a year ago. Plumbing DSO lengthened 1.1% to 40.7 days and plumbing merchant 60-day-plus arrears are 61bps higher than last August, so that segment is worth keeping an eye on.
For the full story, including sector-by-sector detail, regional analysis, and vendor payment insights, read our Latest Industry Risk Indicators, October Edition.