Hospitality also continues to face elevated insolvency pressure, with its liquidation rate sitting 3.3 times that of the average New Zealand business. During the past 12 months, 422 hospitality companies entered liquidation, up from 297 a year earlier.
More than 2900 hospitality businesses also ceased trading during the period, an increase of 38%.
“It doesn’t paint a great picture of the economy, does it?” Dann said.
“But we’re starting to hear the economists sounding a bit upbeat again.”
There had been some data from ANZ, with business confidence showing that things are a little bit upbeat, Parker said.
“They’re indicating that the expectation is things are as bad as they are going to get and they’re getting better. But I don’t know if a lot of people would be feeling that yet.”
It did create a mixed picture for people trying to get a sense from the media of what’s happening with the economy, Dann said.
“Economists look at front-end data and say, ‘Well, the confidence looking forward is positive’, but then there’s this other stuff, the liquidation numbers, which we’re talking about here, and the overall unemployment rate.”
These were the numbers that take the longest to turn, Dann said.
“We might even see GDP growth but out there at the coalface, people are still feeling the blunt force of the labour market downturn.”
There was going to be a long tail of liquidations, Parker said.
“I don’t think that there’s any sign of that stopping any time soon.
“I think there are a lot of companies that are just kind of struggling, hoping things are gonna get better, really hoping for a pick-up,” she said.
“But, if that doesn’t happen, or they just can’t stay on top of their debt levels, sometimes the only option, you know, is to go into liquidation or wind up, just because they can’t keep paying their bills.”
Dann and Parker also dig into the Herald’s Nation of Debt series, which has been running all week, to look at how New Zealand’s debt profile is being changed by the economic downturn.
Listen to the full episode for the complete conversation.
The Economy of Everything is available on the iHeart app or wherever you get your podcasts.
The series is hosted by Liam Dann, business editor-at-large and Tamsyn Parker, business editor for the NZ Herald. Thanks to CMC Markets.