Sign of life for Aussie economy
The worst could be over for struggling businesses in the hospitality and construction sectors, as the number of insolvencies dropped in May.
Two key measures of business stress – insolvencies and business-to-business payment defaults – are easing, CreditorWatch data shows.
Overall, insolvencies are down 0.9 per cent from April to May and have now dropped 12 per cent from their November peak, while business-to-business payment defaults dipped 11.8 per cent in May and are down 18.3 per cent from their peak in December.
The major falls were in the discretionary facing sectors, including hospitality and construction.
The falls come as the same pressures impacting households – inflation, higher interest rates and taxes – begin to ease on businesses.
CreditorWatch chief executive Patrick Coghlan said insolvencies and trade payment defaults had levelled out, albeit at quite elevated levels, suggesting some of the pressures on businesses from higher costs and constrained consumer spending may be beginning to be balanced out.
But he warned that businesses, particularly in the hospitality sectors, are still struggling to pass on higher input costs to customers.
'This levelling off of insolvencies has been long awaited and is very welcome, but we need to remember that several industries still face significant challenges, particularly those exposed to discretionary spending,' Mr Coghlan said.
'If the price of a sandwich at a cafe goes up by three or $4, people can very easily go elsewhere or bring their lunch from home.'
The decline in hospitality businesses facing insolvency follows CreditorWatch data back in October 2024 that showed one in six businesses were rated at high risk of collapsing.
The turnaround follows several tailwinds for these consumer facing businesses, including
two interest rate cuts from the Reserve Bank since February, lower taxes for households starting in July 2024 as well as a further lifting in the minimum wage from July 1.
CreditorWatch chief economist Ivan Colhoun said this increase in payments would come with mixed reactions from businesses in the hospitality sector.
'The good thing is that we will likely see these funds recycled into the economy,' he said.
'Interest rate relief by the RBA, as inflation has moderated, should also improve cash flow a little for both consumers and businesses alike.
'(But) the Fair Work Commission's decision to increase the national minimum wage from 1 July 2025 will benefit consumers but apply further pressure on businesses, particularly in retail and hospitality.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
CNET
24 minutes ago
- CNET
Mortgage Forecast: Homebuyers on Hold After Fed Puts Off Interest Rate Cuts
As the Federal Reserve likely holds interest rates steady, mortgage rates are expected to stay in a narrow range. Tharon Green/CNET The Federal Reserve held interest rates steady for the fourth consecutive time this year at its monetary policy meeting this week. However, rising jobless claims, intensified geopolitical conflict and slowing economic growth could force the central bank to cut rates as early as the fall. As turbulent trade policies pressure financial markets, investors have been wondering how President Donald Trump would influence the Fed's interest rate forecast. Trump has repeatedly scolded the Fed for not lowering borrowing costs already. The central bank is cautiously projecting two rate cuts in 2025. The Fed is tasked with maintaining maximum employment and containing inflation, primarily through setting its short-term benchmark interest rate for lenders. A sluggish economy typically warrants interest rate cuts to stimulate growth, but lowering rates too quickly could fuel price growth when inflation is still above target. At the same time, the Fed only indirectly impacts the mortgage market. In 2024, the central bank cut interest rates three times, but mortgage rates didn't fall. According to Bankrate data, the average rate for a 30-year fixed mortgage has moved in a narrow range between 6.7% and 7% since mid-April. Though housing affordability was expected to gradually improve in 2025, uncertainty over the direction of the economy has altered those forecasts. Most economists say mortgage rates will stay above 6.5% for the better part of the year. "You'd need to see mortgage rates pretty far below current levels, certainly below 6.75%, to incentivize homebuyers," said Beth Ann Bovino, chief economist at U.S. Bank. "Everybody's in a wait-and-see mode, not just the Fed," Bovino added. Mortgage rates aside, prospective homebuyers are also contending with a long-standing housing shortage, high home prices and a loss of purchasing power due to inflation. "Prices are still incredibly high," Bovino said. "Add to that the borrowing costs of a mortgage, and it's prohibitively expensive for most people to get into the housing market." Experts say many of the Trump administration's policies, such as tariffs, could cripple housing affordability even further, putting upward pressure on interest rates and the cost of building materials, like lumber, used to build new homes. CNET What's the path for mortgage rates now? Mortgage lenders base their rates on a range of factors. While the Fed's monetary policy changes regarding interest rates can influence overall borrowing rates, mortgage rates are primarily driven by movement in the bond market, specifically the 10-year Treasury yield. Bond yields and interest rates rise or fall depending on how new economic data shifts market speculation and risk assessment. If tariff policies recharge inflation, more affordable mortgages and housing will be difficult to achieve. "Even though many of the tariffs are in place, some of the big ones have yet to take effect," said Bovino. When people are nervous about finances, they'll be more reluctant to take on new debt. The average household in the US is expected to lose about $3,000 in income from tariffs, with lower-income households getting hit even harder, according to Bovino. Despite Trump's earlier claims that he would bring mortgage rates down to 3%, the White House doesn't set rates on home loans. Moreover, those kinds of rock-bottom pandemic-era rates would normally indicate that the country is in a severe economic crisis. Still, mortgage rates have the potential to dip this year. Given the economy's precarious nature, any sign of risk could lower bond yields and put downward pressure on mortgage rates. For example, Bovino said that markets will be weighing the impact of the Israel-Iran conflict, which could increase oil prices and spark concerns of an economic downturn. If unemployment spikes or a recession appears likely, mortgage rates could start decreasing. How to deal with high mortgage rates Prospective homebuyers who have been waiting for mortgage rates to drop for the past few years may soon have to adjust to the "higher for longer" rate environment, with mortgage loan rates fluctuating between 5% and 7% over the longer term. Since the 1970s, the average rate for a 30-year fixed mortgage has been around 7%. While market forces are out of your control, there are ways to make buying a home slightly more affordable. Last year, nearly half of all homebuyers secured a mortgage rate below 5%, according to Zillow. Here are some proven strategies that can help you save up to 1.5% on your mortgage rate. 💰 Build your credit score. Your credit score will help determine whether you qualify for a mortgage and at what interest rate. A credit score of 740 or higher will help you qualify for a lower rate. 💰 Save for a bigger down payment. A larger down payment allows you to take out a smaller mortgage and get a lower interest rate from your lender. If you can afford it, a down payment of at least 20% will also eliminate private mortgage insurance. 💰 Shop for mortgage lenders. Comparing loan offers from multiple mortgage lenders can help you negotiate a better rate. Experts recommend getting at least two to three loan estimates from different lenders. 💰 Consider mortgage points. You can get a lower mortgage rate by buying mortgage points, with each point costing 1% of the total loan amount. One mortgage point equals a 0.25% decrease in your mortgage rate. Now Playing: 6 Ways to Reduce Your Mortgage Interest Rate by 1% or More 02:31
CBS News
31 minutes ago
- CBS News
Federal Reserve holds its benchmark interest rate steady at today's FOMC meeting
What mixed signals on the economy are saying What mixed signals on the economy are saying What mixed signals on the economy are saying The Federal Reserve said Wednesday it is holding its benchmark interest rate steady, marking a continuation of its "wait-and-see" approach as it assesses the impact of the Trump administration's economic policies. By the numbers The central bank on Wednesday said it will maintain the federal funds rate at its current range of 4.25% to 4.5%. The rate has remained at that level since President Trump took office in January. The last time the Fed cut rates was in December 2024, when it trimmed rates by 0.25 percentage points. The federal funds rate reflects the interest rate banks charge each other for short-term loans. A higher benchmark rate can make borrowing more expensive for businesses and consumers because it helps determine what businesses and consumers pay in interest on loans and credit card debt. When the benchmark rate is lowered, loan rates tend to follow, making it less expensive to borrow money. Last month, Fed Chair Jerome Powell said the central bank was monitoring whether the Trump administration's tariffs could spur higher inflation, although he noted that the impact hadn't yet materialized in hard economic data. Mr. Trump has repeatedly called on the Fed to slash rates, including on Wednesday morning before the Fed announced its decision. During remarks to the press, Mr. Trump called out Fed Chair Jerome Powell, saying he's "done a poor job." "We had the highest inflation we ever had and then it came down when I got elected," he said. "Now we have a man who refuses to lower the Fed rate." What does the Fed say about the economy? In determining rate cuts, the Fed's goal is keep inflation low and maintain a healthy job market. In its announcement Wednesday, the central bank mentioned solid labor market conditions and an economy that continues to grow at a steady rate, although it also signaled caution. "Uncertainty about the economic outlook has diminished but remains elevated," the Fed wrote. There has been speculation that Mr. Trump's tariffs could drive up inflation, but so far it has remained in check. The Consumer Price Index rose slightly in May to 2.4%, up from 2.3% in April. The job market also continues to chug along, although some economists forecast that it could start to weaken in coming months.
Entrepreneur
38 minutes ago
- Entrepreneur
How Entrepreneurship Can Disconnect You From Your Inner Self
Opinions expressed by Entrepreneur contributors are their own. There's something powerful about creating and designing your own business that gives us entrepreneurs a sense of pride and accomplishment. From the earliest days of planning out a product or service to building the marketing strategy to landing your very first contract, each of those moments began with a design. And it's this design that's held near our innermost parts — the reason we often call our businesses our babies. We put so much thought into how we want our brand and business to be perceived, so much so that we stay up at night working long days and fine-tuning every aspect of our brand. All the while, we're losing sleep, not eating right, or worse, our stresses alter our perception of ourselves. A question that recently came up in a conversation with colleagues was, "How did I become this person? When and where did I change throughout this process?" After we've built businesses and developed well-defined brands, how did we lose steam when designing ourselves? What does it mean to design yourself? Well, we are human, not business entities after all. However, much of our inner selves is heavily designed and shaped by our environments, childhoods, life experiences and relationships. And adding on to that, the changes that can take place during the times we're focused on business and work can sneak up on us, which is when we tend to disconnect from the person we were before designing our business. The disconnect can feel like a place of unfamiliarity and stagnation. There is good news: When we take back control of this design, it can lead to massive transformations. Related: How This Female Founder Never Lost Herself When Starting a Successful Business Who really designed you? As I talked with that colleague about who we've become over the years, she said she didn't recognize this person who had become so wrapped up in work anymore. We chatted about the topic longer, and I listened as she dissected all of the voices and experiences that have shaped this new person — someone she didn't like. I asked a simple question, "Who do you say that you are?" She was stunned and stumbled over her words a bit. It became apparent to me that the inner self often gets neglected while we're designing other aspects of our lives — especially our businesses. We're told things like, "You don't have the skills for that," or "You're not a good fit" or my favorite, "I don't see the value in your service." Ouch. These phrases can sting, or worse, leave gaps where our minds try to fill in with assumptions and negative thoughts. Sit for a moment and think about how anything you've heard from clients, competitors or naysayers might've translated into your inner design. How do you feel about that? Do you believe the things that have been said? Taking control of your design Regaining control over your inner design may sound like a daunting task. But don't be discouraged! While I can't promise overnight results, I'll offer some tips that may help you dig deeper into this phenomenon and hopefully push you to think about how to take back control of your design. 1. Self-reflect: What traits do you love about yourself? What traits do you want to improve upon? Why do you like certain parts of yourself, or why not? Really start thinking about these questions and forming answers that you believe in. For example, during a training session years ago when I was selling jewelry, I was coached on how to approach customers. I was told that I was too quiet and passive. I needed to be more aggressive if I wanted to see sales conversions. The feedback was a little more harsh than that, if I recall! I went home and was upset for a while, thinking, "I don't like aggressive sales tactics." Why? Because I knew that I wouldn't like it as a customer, so why would I do it to others? In short, I decided that I liked the way I sold. Low pressure and listening to what the customer wanted was my method. And guess what? Within just a few months, I had become the highest-selling gold jewelry salesperson. I didn't want my coach's voice dictating who I needed to be in order to be successful. Ask yourself the hard questions, give yourself an answer and live it. Related: Are You Living Your Most Authentic Self? 2. Question your motives: Why are you working so hard? Who are you trying to impress? Are you working on a relationship for the wrong reasons? Yes, this is more reflection with a twist! What I've found over the years is that often our motives can tell us a lot about who we are. Our motives are held close to our chests, and we rarely reveal them to others. But if we practice the art of questioning why we do what we do, we might find that our motives could be holding us back from living our true design. As an example, I was in a situation where I wasn't quite getting what I wanted out of a relationship in a new field. You see, I was just starting to become familiar with folks in the fashion scene here in Chicago, and I was going to multiple events per day. It was burning me out. I had to stop and ask myself: Why was I doing this? My answer shifted something inside me. I peeled back an answer — a truth that I felt I wasn't well known — I was a nobody in the fashion world. And I was living for a world that, in part, I had built up within my mind. I felt the need to show up as much as possible so I could get ahead in this "world." I was draining myself and putting stress on people close to me with the motive of trying to appear as a fashion person. I listened to the voice telling me that I was nobody. My motive made me realize that I wasn't truly in control of my design. I was trying to appear as someone I was not (I changed my focus to building solid relationships authentically). Relationships with boundaries that I dictate. Question your motives and answer honestly. The answer might take some time to come to you. When it does reveal itself, things in your life might begin to make more sense. 3. Practice saying the positive out loud: Yes, say it out loud into the world. Imagine your business growing in a void — it can't! Your business grew and developed because you spoke about its design, you shared your ideas, and you were excited to explore everything your business had to offer the world. Now, when we think about ourselves, how often do we say things in our heads (some good, but mostly bad)? Get out of your head. Find those things you like about yourself and say them out loud. Create an inner-self elevator pitch that you feel good about repeating. For a practical example that doesn't just involve repeating affirmations in a mirror or regurgitating items on your resume, try speaking things out loud as if you were speaking on behalf of yourself to a new person. Try saying something like, "DeAnna has a quiet confidence, and she really holds herself to a high standard in life. You can trust her because she's a pretty honest person." Oh, I'm blushing! Compare this type of self-dialogue to, "I have strong client services experience, and I've helped companies navigate internal concerns. I have excellent communication skills. I am kind, and loved, and I deserve this life!" Bleh, generic (I mean absolutely no offense to you if these are your affirmations). If you've been able to get through steps one and two, you will be able to speak honestly and truthfully about your inner design. You'll be able to speak from a place that is real — a place that you love. Related: 6 Essential Mantras to Refocus Your Life and Business The power of your inner design This is the power that allows you to walk into a business meeting, an interview, a prospect call or any room and confidently know who you are, regardless of what others may think. You can be the big fish; you can be the pond for all I know. You can be the person you've designed. Building on the conversation I had with my friend, even someone who feels they've lost their sense of identity can still design and create who they want to be. It's called storytelling for a reason; you tell the story of you. Being in a strong state of awareness is a major power source that has driven some of the most influential people in history to their success. That same power is something you have access to. And it starts with your thoughtful design. As entrepreneurs, we can't just wander through business — we'll be walked over. I personally don't want that for any of you. I want to see you all living the design of your life to the best of your ability. Keep in mind that your design may require some updates and improvements along the way. As long as you remain in control of those changes, you won't lose yourself again. How would you design your inner self? Or, how do you like your current design?
