Small businesses are experiencing elevated debt stress at more than double the rate of non-business owners. Photo: 123RF
Consumers are getting on top of their debts, but it is a different story for small businesses, with liquidations on the rise.
Credit reporting firm Centrix said June's data paints a complex picture, with a slight year-on-year improvement in arrears, while small businesses were experiencing elevated debt stress at more than double the rate of non-business owners.
The June report indicated the number of individuals behind on payments in June fell by 7000 to 478,000, representing 12 percent of the credit-active population.
Mortgage arrears fell 1.4 percent with 21,600 home loans past due, while mortgage enquiries surged by nearly 17 percent, with 79 percent of mortgages due to be repriced over the next 12 months.
On the business front, credit demand rose 8 percent year-on-year, with growth in retail and hospitality sectors (23 percent) and financial, insurance, arts, and recreation services (22 percent).
However, company liquidations were up 26 percent year-on-year, with construction the leading contributor to liquidations, followed by hospitality which had overtaken property as the second-largest affected sector.
"Small businesses continue to face significant challenges, particularly sole proprietors managing multiple ventures," Centrix managing director Keith McLaughlin said.
"This group is experiencing elevated debt stress - more than double that of non-business owners - often relying on home equity to sustain operations."
He said the latest data indicates global economic uncertainty continued to slow New Zealand's economic recovery, with persistent inflationary pressures and the ripple effects of international tariffs.
"In light of these trends, it's crucial for Kiwi households and businesses to maintain a clear understanding of their financial health and seek guidance from trusted advisors to navigate the economic uncertainties ahead," McLaughlin said.
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