Economic recap February saw another lift in the Official Cash Rate by 50 basis points, with a further 75 basis points expected to be added this year. The language from the reserve bank indicated that they had not seen the expected signs in inflation pull back and were continuing on their chosen path from 2022 to get inflation under control as quickly as possible. The extreme weather events experienced in January continued into February with considerable damage to parts of the North Island. While the immediate effects have been considerable in certain areas the long term effects and costs will have wide reaching repercussions as additional spend will be necessary and likely increase demand on limited supplies and pressure on…

Economic recap Inflation has remained constant in the final quarter of 2022 at 7.2 the same as at the end of the third quarter in 2022, it is still down from the 7.3 high point seen during 2022. While economists and the Reserve Bank were hoping for a drop this factor will be weighing on the Reserve Banks mind in its ongoing fight against getting inflation back to its 1%- 3% target band. While other developed countries across the world begin to see inflation coming under control we are not yet there in New Zealand. Coupled with the elevated inflation we have business confidence at all-time lows as seen in surveys run at the end of 2022 and through January…

Economic recap The OCR continues its march on an upwards trajectory, with the latest Reserve Bank rise of 75 basis points to 4.25 and a supporting narrative outlining future raises in 2023 of up to 125 basis points to bring the OCR to 5.0 and over. From an economic perspective there continue to be a number of factors affecting businesses. The labour crunch remains with immigration not making up for the continued brain drain as people leave on OE’s or delayed travel plans. Shipping and product delays continue with China’s lockdowns as they struggle to grapple with a continued covid outbreak. On the construction front while councils continue to catch up on the backlog of buildings consents keeping the monthly…

Economic recap With the third quarter of 2022 inflation results coming in at 7.2 well above a number of economists and banks predictions of 6.5 we will likely be seeing jumps in the OCR at a steeper rate than expected with the next rate rise projected to be 75 – 100 basis points up from the prior estimation of 50 points. This will keep the pressure on homeowners with mortgages and businesses with lending as consumers role off fixed rates. With inflation well above the target levels of 1%-3% business continue to struggle on with constrained capacity and labour issues. Leading into the Christmas period we will no doubt see the seasonal jump in retail sales followed by regional growth…

Economic recap The NZ economy managed to dodge a formal recession (2 consecutive drops in GDP) in the 2nd quarter of 2022 with a lift in GDP following negative GDP in the 1st quarter. While the economy may not be in a formal recession there remain a number of challenges affecting NZ businesses from issues sourcing product to increasing inflation, interest rates and decreasing domestic spending as New Zealanders look to travel for the first time in 2 years. Businesses continue to have trouble to find the necessary staff with low unemployment levels continuing. Of note is the speedily decreasing value of the NZD when compared with other currencies. This will make importing goods and services more expensive for businesses…

It’s important to address disputed debt as soon as possible. This will more likely lead to a positive outcome and enable you to rescue your business relationship. You cannot recover a debt via a statutory demand if the debt is disputed. And, of course, you need cash to continue to operate, so it’s important to find a solution quickly. Below, we outline the three steps to settling disputed debt: FIRST: PREVENTING DEBT DISPUTES WITH STRONG IN-HOUSE CREDIT CONTROL AND TERMS OF TRADE Of course, the best way to minimise disputed debt is to avoid the situation where disputes can arise in the first place. Many disputes can be avoided by good record keeping. Clear terms of trade and customer credit…

Economic recap We make our way through another winter month where we finally saw the NZ boarder fully re-open for the first time since 2020, this has helped our net migration, but levels remain lower that pre pandemic. We also saw our first cruise ship landed back in the Auckland CBD since 2020 making news stories across the country. There remain a number of adverse factors affecting businesses starting with a weakening NZ dollar, staff shortages continuing, the seasonal downturn in industries during the winter months coupled with the sports related downturn resulting from the All Blacks continued losing and patch performances. Coupled with overseas influences of China’s covid policies affecting supply chains along with the ongoing war in Ukraine…

Economic recap International and domestic market factors continue to affect the economy and have and effect on businesses in New Zealand. Supply shortages, increasing costs of living and inflation continue to put pressure on businesses margins, this coupled with an inability to find staff to fill empty rolls is causing a number of issues for businesses trying to retain staff or grow. Unsurprisingly the July 2022 OCR announcement saw the Reserve Bank lift the Official Cash Rate a further 50 basis points as indicated in their earlier announcements. The OCR lifts are expected to continue for the remainder of the year and into next year as they use what tools they have available to try and tackle rising inflation. In…

Economic recap Another month with insolvency appointment figures on a downward trend while economic factors begin to squeeze businesses. Those factors affecting the economy are little changed from prior month updates including; InflationIncreasing Costs of Living (now called a crisis) Increasing Financing Costs Falling House Prices and Sales Volumes across NZ Supply Chain Issues (now increasing due to China zero Covid policies) Increasing Wages Low Unemployment Making Finding Staff Difficult Tightening Margins Looking at the Xero SME index graph, it shows April 2022 up by 20 points on previous months and on an upswing. However, it does not appear to be reflected in business confidence which has been falling as several of the economic factors, if not all, continue to…

Economic recap The March 2022 insolvency figures continue to be below past years. For the wider economy we saw inflation figures for the year to date at 6.9%. Slightly under what was expected from economists as a group but still well above the levels where they should be. The high inflation figures have led to an expected response from the Reserve Bank lifting Official Cash Rate (OCR) by 50 basis points in an effort to head off rising inflation. From discussions with business owner on the coal face the cost of rising inflation, OCR raises, the rise in the minimum wage, increased sick days and introduction of new public holidays (Matariki) are a perfect storm of expenses that are unable…

Economic recap Recent lockdown measures in China are once again causing delays at their ports, just as the shipping and freight delays looked to be easing. This will continue to keep freight prices high and flow through to the end consumer and businesses. With a cooling Housing sector delays and cost increases will continue to keep the pressure on developers in the building industry, where building materials for the large number of building consents issued continues to constrain supply. How these shortages and labour shortages are managed by developers and building companies will continue to be of interest; they can do little but watch on as their margins continue to whittle away on their ongoing projects. If you have been…

With the availability of government subsidies becoming harder to obtain the Inland Revenue Department (IRD) and Ministry of Social Development (MSD) have begun the process of reviewing a business’ entitlement to the various covid subsidies they had received. It was well publicised at the time that both the wage subsidy and resurgence support payment scheme were “high trust” models, with emphasis placed on getting the funds out to business’ in need quickly, rather than a proper review of the evidence upfront. Initially the “audits” of the wage subsidy scheme by the MSD were more of a check box exercise, where they accepted verbal confirmations from business owners rather than conducting a proper review. This subsequently resulted in the Auditor General…