Business credit demand moderates in September quarter

Equifax New Zealand Quarterly Business Credit Demand Index: September 2023

• Overall business credit applications fell by -1.2% (vs September quarter 2022)
• Business loan applications were flat +0.3% (vs September quarter 2022)
• Trade credit applications declined by -8.0% (vs September quarter 2022)
• Asset finance applications increased by +7.2% (vs September quarter 2022)

AUCKLAND – 7 November 2023 – Business credit demand stabilised, down -1.2% year on year in the September quarter of 2023, following a strong June quarter 2023 result. Overall demand has steadied, with solid demand growth in the Accommodation and Food Services sector, offset by some softness in the Construction sector.

The data has been released today by Equifax New Zealand, the global data, analytics and technology company and leading provider of credit information and analysis, in line with the Equifax Quarterly Business Credit Demand Index - September 2023. The Index measures the volume of credit applications for trade credit, business loans and asset finance.

According to Equifax, asset finance (+7.2%) and business loans (+0.3%) remained positive year-on-year, with trade credit falling sharply (-8.0%). The varied results across commercial credit portfolios and industries reflect continued market uncertainty.

Equifax New Zealand Managing Director, Angus Luffman, says, “Business credit demand stabilised in the September quarter, down slightly on the same quarter last year and largely in line with the June quarter. There was mixed demand across the business credit products, with overall demand remaining 10-12% below pre-pandemic levels.”

“Despite strong demand through August, business loans and trade credit softened, at greater than seasonal rates, during September in the lead up to the election. Asset finance applications bucked the trend with month-on-month increases in August and September,” Luffman added 

The Accommodation and Food Services sector (+16.0%) demonstrated continued recovery with strong year on year growth bringing demand to pre-pandemic levels. The Transport (+19.2%) and Manufacturing (+5.1%) sectors continue to see rising demand and Retail trade (+3.1%) had modest growth. Notable declines in commercial credit demand were in Agriculture, Forestry and Fishing (-6.2%), Professional, Scientific and Technical Services (-4.1%) and Construction (-3.5%). 

“A positive is that the Accommodation and Food Services sector, which was heavily impacted by the pandemic, continues to show strong signs of demand recovery. In the September quarter we saw the highest quarterly volume in the sector in the last four years.

“The construction sector, a material contributor to the New Zealand economy and overall commercial credit demand, was down -3.5% for the September quarter versus the same period in 2022, but remains ~3% above pre-pandemic levels.” Luffman said.

CHART 1: Business credit demand index YOY changes (%)

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FOR MORE INFORMATION
Annie Hogan | annie.hogan@dentsu.com
 
NOTE TO EDITORS
The Equifax Quarterly Business Credit Demand Index measures the volume of credit applications that go through the Equifax New Zealand Commercial Bureau by financial services credit providers in New Zealand. Based on this, it is considered to be a good measure of intentions to acquire credit by businesses. This differs from other market measures published by RBNZ or Stats NZ, which measure new and cumulative dollar amounts that are actually approved by financial institutions.

DISCLAIMER
Purpose of Equifax media releases:
The information in this release does not constitute legal, accounting or other professional financial advice. The information may change, and Equifax does not guarantee its currency or accuracy. To the extent permitted by law, Equifax specifically excludes all liability or responsibility for any loss or damage arising out of reliance on information in this release and the data in this report, including any consequential or indirect loss, loss of profit, loss of revenue or loss of business opportunity.