But mixed demand across products reflect market uncertainty
Overall business credit demand has moderated in the third quarter of 2023, following a robust performance in the previous quarter, according to the latest insights from Equifax New Zealand.
Equifax New Zealand’s Quarterly Business Credit Demand Index for September, which measures the volume of credit applications for trade credit, business loans, and asset finance in New Zealand, showed business credit demand eased to -1.2% year-on-year, with solid demand growth from the accommodation and food services sectors, offset by some softness from the construction sector.
Equifax data showed that asset finance had a positive year-on-year growth of +7.2%, while business loans increased by +0.3%. In contrast, trade credit sharply fell by -8%.
Angus Luffman (pictured above), managing director of Equifax New Zealand, said the varied results in commercial credit portfolios and industries reflect ongoing market uncertainty, with overall demand still 10-12% below pre-pandemic levels.
“Despite robust demand throughout August, business loans and trade credit saw declines, which were more pronounced than seasonal variations during September, likely influenced by the upcoming election. Interestingly, asset finance applications bucked this trend with month-on-month increases in August and September," Luffman said in a media release.
The accommodation and food services sector posted a substantial +16% year-on-year growth, bringing demand back to pre-pandemic levels. The transport and manufacturing sectors, too, continued to see rising demand, up+19.2% and +5.1%, respectively, while retail trade had a modest +3.1% growth. Notable declines in commercial credit demand were observed in agriculture, forestry, and fishing (-6.2%), professional, scientific, and technical services (-4.1%), and construction (-3.5%).
“A positive sign is the strong demand recovery in the accommodation and food services sector, which was heavily impacted by the pandemic,” Luffman said. “In the September quarter, we witnessed the highest quarterly volume in the sector in the last four years.
“The construction sector, a significant contributor to the New Zealand economy and commercial credit demand, was down -3.5% for the September quarter compared to the same period in 2022 but remains approximately 3% above pre-pandemic levels.”
For more information, read the Equifax New Zealand Quarterly Business Credit Demand Index. To compare the latest data with the previous results, read Business credit demand up – Equifax.
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