Centrix says company liquidations are continuing to rise with the manufacturing sector most affected over the past year

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."