Rising number of liquidations sees wholesale trade sector, construction and transport hard hit, credit bureau Centrix says

Business failures continue increasing with the wholesale trade sector being particularly hard hit, credit bureau Centrix says.

Centrix's latest monthly Credit Indicator report, for November, notes company liquidations across New Zealand increased 27% year-on-year, rising across most regions. And business credit defaults are up 16%, on average, year-on-year as they were last month.

In the wholesale trade sector liquidations rose 82% year-on-year, to 89 from 49, Centrix says.

Of those 89 liquidations, 23 were in the machinery and equipment wholesaling sector, 20 were in each of the grocery, liquor and tobacco product wholesaling sector and the furniture, floor coverings and other goods wholesaling sector, with eight in the motor vehicle and motor vehicle parts wholesaling sector.

A further five came in the commission-based wholesaling sector, four in timber and hardware goods wholesaling, three in both the textile, clothing and footwear wholesaling and agricultural product wholesaling sectors, two in mineral, metal and chemical wholesaling, and one in pharmaceutical and toiletry goods wholesaling.

"Company liquidations are up 82% year-on-year for the wholesale trade sector, which represents nearly 3% of all registered companies in New Zealand, indicating the industry is still facing challenges with lower demand across the economy," Centrix says.
"In particular, grocery, machinery and equipment, motor vehicle and furniture wholesaling businesses have seen a significant rise in insolvencies in recent months."

Centrix says business credit defaults are up across the board, with the average default amount rising to almost $8,000. (See chart below). The worst affected sectors include the construction and transport sectors, with credit defaults up 38% and 35%, respectively.

Company liquidations across the country rose 27% year-on-year, rising in most regions, the Centrix data shows. (See chart below). However, October saw 223 liquidations, down from 306 in September, which was the highest monthly total for a decade.

"In the third quarter of 2024, there were 355 company liquidations in Auckland, up 41% year-on-year, 218 in the rest of the North Island, up 51% year-on-year, and 134 in the South Island, up 14% year-on-year. Residential building construction, property operators and cafes/takeaway food companies have been the most likely to be placed in liquidation during the last year," says Centrix.