Economic Rundown
As we pass the 100-day mark of Auckland’s lockdown businesses unable to trade at 100% capacity continue to struggle due to the alert level restrictions in place. The country was given the target of 90% fully vaccinated to move into the traffic light system, this has now been pulled forward for all regions from the start of December. The percentage of people vaccinated will have some influence at what traffic light setting the regions enter the new system at. For Auckland this can only mean a drop in restrictions as the highest vaccinated region however for some small regions with lower vaccinated levels they will likely see tighter restrictions in their region. Until then neighbouring regions phaze in and out of the various levels of lock down while covid continues to spread across the north island.
Insolvency figures continue at the low levels of the past few months. Business support remains in place from government subsidies. How this will transition to the new traffic light system is yet to be seen with the resurgence support payments previously available till the region returned to alert level 1.
Market constraints continue to affect the economy with unemployment continuing its downward trend to 3.4% for the September quarter, supply restrictions a constant concern and the cost of living is on the rise with inflation on the up. For homeowners interest rates are on the rise with the lift in the OCR projected to have a reasonably quick affect with a high level of borrowers fixed for 1 year or less. Shipping delays and high shipping costs continue to be an issue for businesses moving into the Christmas period.
Company Insolvencies – Liquidations, Receiverships, and Voluntary Administrations
Company insolvency appointments are sitting at 2020 levels for October 2021 and continue their downward trend. This is normal heading into Christmas with the lows of January ahead as most professional services take the month off. Of note are the high levels of solvent liquidations when compared to previous years at 30 for the month as shareholders continue to wind up solvent businesses and distribute the profits for use elsewhere. Receiverships saw a jump for the month up to 9 both company and personal receiverships up from the 4’s posted in the 2 prior months. As mentioned last month shareholder and creditor appointments both continue to drop.
Insolvency by Industry
“Construction & Property Development” and “Accommodation & Food” continue to make up just under half the total appointments at similar figures to those detailed last month. Retail have increased in number of appointments from 7% to 13% while the remainder of the categories play musical chairs in the low percentiles.
Personal Insolvencies – Bankruptcy, No Asset Procedure and Debt Repayment Orders.
October figures saw a slight bounce back from September lows but are still well below 2019 and 2020 personal insolvency levels. Time will tell how rising inflations will affect personal insolvency figures as the usual Christmas squeeze hits wallets and overspending goes on the credit card moving the problem into 2022.
Winding Up Applications
With the lower alert levels outside of Auckland in October the IRD has begun to take action against those businesses in arrears that are in these lower alert level regions.
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Keaton.