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Business credit demand dips again in December quarter

Business credit demand softened in the quarter to December, down 8.7% on the previous quarter, and down 1.3% year on year. However, hospitality and accommodation continued their post-pandemic recovery, with Q4 2023 up 5.6% against Q4 2019, and up 15.7% on Q4 2022. Transport also continues to perform well but professional services and construction are still struggling.

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 – December 2023. The Index measures the volume of credit applications for trade credit, business loans and asset finance.

According to Equifax, asset finance (+4.8%) and business loans (+2.9%) remained positive year-on-year, while trade credit enquiries again dropped sharply (-9.6%). The varied results across commercial credit portfolios and industries reflect ongoing market uncertainty.

Equifax New Zealand spokesperson Nick Foster says: “As expected, demand was soft in December specifically but overall the quarter was relatively stable. Food services, accommodation and transport are performing strongly in general, while agriculture, forestry and farming was quite soft throughout 2023, ending -4.7% down year on year in Q4.

“Trade credit demand is down across all major industries, apart from hospitality and accommodation, while asset finance demand has seen six consecutive quarters of year-on-year growth. It’s up across all key industries, except for professional and technical services which is down -11.7%.

“Looking at construction, overall enquiries are up slightly (+1.2%), with business loans up +1.6%, asset finance up +5.7%, but trade finance down -5.2%.”

Comparing Q4 2023 to Q4 2022, the Accommodation and Food Services sector is up by +15.7%, Transport by +17.7%, and Retail by +2.4%.

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

 

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