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. Insolvencies have fallen in the hospitality sector. NewsWire / Luis Enrique Ascui Credit: News Corp Australia
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. The number of businesses facing insolvency is falling, albeit from a high level. Supplied Credit: Supplied
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.' There are signs Australians are beginning to return to the shops. NewsWire / John Appleyard Credit: News Corp Australia
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
7NEWS
2 hours ago
- 7NEWS
Superannuation Guarantee increase to 12 per cent set to give Australians thousands more in retirement boost
Close to 10 million Australians are weeks away from a superannuation boost that experts believe will place young workers on track for a 'comfortable retirement'. The Superannuation Guarantee — the minimum amount your employer is legally required to pay towards your super every year — will increase from July 1. The guarantee is currently at 11.5 per cent of your annual earnings, but will jump to 12 per cent in the new financial year. A 30-year-old worker earning $75,000 a year is set to be $20,000 better off when they retire, the Association of Superannuation Funds of Australia (ASFA) calculates. It means that the worker will retire with $610,000 in super savings, $15,000 above what a single homeowner needs for a comfortable retirement that includes a budget for top level health insurance, a reasonable car that is maintained, regular leisure activities and holidays, and the confidence to use air conditioning and other utilities. It is the 'first time' ASFA has projected that a 30-year-old on a median wage will be on track to achieve that standard of living when they leave the workforce. 'This is a major milestone in Australia's retirement system,' association chief executive Mary Delahunty said. 'With the super guarantee increase to 12 per cent, we are seeing super fulfil its objective of providing a dignified retirement for ordinary Australians.' Check your pay slip CPA Australia's superannuation lead Richard Webb said the increase 'could ultimately be worth thousands' by retirement, but workers should have a word with their employer before the new financial year. 'If your employment contract includes a total remuneration package including super, this could mean less take-home pay at the end of the month,' Webb said. 'However, for those on award or enterprise agreements, your pay agreement is more likely to be a salary, which means the change will not affect your take-home pay. 'It's a good idea to check with your employer to see how they view the changes and what it means for you. 'Otherwise, you might get a shock if your take-home pay is a little less than expected.' Costs in retirement ASFA's latest Retirement Standard benchmark found the cost of funding a comfortable retirement had increased 1.6 per cent in the last year, with most homeowning couples needing $73,875 annually and most singles who own a dwelling needing $52,383. Single renters aged 65 need about $46,663 annually for a modest retirement, while couples leasing their home need about $64,259. The super lump sum needed for a modest standard of living (basic health insurance, a cheaper car, infrequent leisure activities, bill watching and utility sacrifices, and limited meals at restaurants) is $340,000 for a single person renting privately and $385,000 for a couple. 'These new figures demonstrate how important it is that we build more homes in this country so Australians can buy a house or an apartment,' Delahunty said. 'They also illustrate how super can be the difference between hardship and stability later in life, especially for renters, which is why we need to keep it safe for retirement.' The association said that overall inflation pressures had eased, budgets were being stretched by increases in fruit and vegetables (6.6 per cent), meat and seafood (4.3 per cent) and electricity prices. 'Australians in retirement are starting to benefit from a slowdown in inflation, but the prices of essentials are still rising,' Delahunty said. 'It's a timely reminder that achieving a dignified retirement takes planning, and superannuation plays a critical role in making that possible.' The Super Members Council said the guarantee boost will help cover bills, trips away and financial security. 'More super means more freedom, more choices and more opportunities to do the things you love,' council chief executive Misha Schubert said. Super health check Australia's super guarantee was introduced in 1992. At the time, the mandatory contribution rate was just 3 per cent. With July marking the final legislated increase to the SG since 2021, Webb said it is important for Australians to ensure they are in control of the super (you can find more super tips here). 'It's never too late to look into growing your retirement savings, including making additional contributions to your fund before the end of the financial year,' Webb said. And, with the , it could also be time to take a look at what you might be missing out on.
Perth Now
2 hours ago
- Perth Now
Major miners drag the ASX200 down
A sell-off in the major iron ore and gold miners weighed on the ASX 200 on Wednesday, as investors bide their time and await the fallout from the Israel-Iran conflict. The benchmark ASX 200 index fell 10.1 points or 0.12 per cent to 8,531.2 on a day investors largely stayed on the sidelines. The broader All Ordinaries also slipped 13.20 points or 0.15 per cent to 8,757.90. The Australian dollar traded marginally higher up 0.37 per cent to buy 65.03 US cents. On a day of low trading volume, eight of the 11 sectors finished up, despite the overall market falling. Overall 104 stocks ending in the red, 86 gaining and 10 remaining unchanged. But this was not enough to lift the overall market, with a slump in material, utilities and A-REITs offsetting gains in the information technology and healthcare sectors. The major miners slumped dragging the ASX 200 lower. Picture Newswire/ Gaye Gerard. Credit: News Corp Australia Materials slumped 1.56 per cent on the day with the price of iron ore falling to $US93 a tonne amid sluggish growth forecasts out of China and US steel tariffs. BHP shares fell 1.18 per cent to $36.86, Fortescue slumped 4.02 per cent to $15.03 and Rio Tinto fell 1.07 per cent to $106.00. Citi Group has cut its iron ore price forecasts, predicting $US90 a tonne for both the next three months and the next 6–12 months. ANZ senior commodity strategist Daniel Hynes said a combination of low demand and high supply was seeing the price of the commodity fall. 'The rainy season has slowed construction activity in southern China. In the north, high temperatures are contributing to a slowdown,' he said. 'Beijing's efforts to curb overcapacity in the steel industry looks to be playing out, with China's steel production falling 6.9 per cent in May.' Gold miners were also a drag on the ASX, with the price of the underlying commodity also dropping. Northern Star Resources is down 1.95 per cent to $20.58, Evolution Mining slipped 3.55 per cent to $8.15 and Genesis Mineral slumped 3.00 per cent to $4.53. Despite the ASX falling on Wednesday more stocks finished in the green. NewsWire / Max Mason-Hubers Credit: News Corp Australia It was a mixed day for the big four banks with CBA gaining 0.58 per cent to $180.19 and Westpac eked out a small gain up 0.03 per cent to $33.02. NAB slipped 0.23 per cent to $38.71 and ANZ finished in the red down 1.43 per cent to $29.04. Investors remained on the sidelines, with the ASX now only swinging 59 points or 0.70 per cent during the last two and half days of trading until 2.30pm. IG market analyst Tony Sycamore said the average range on the ASX over the past nine weeks has been 165 points or almost 2 per cent. 'This suggests there is room for some fireworks/movement into the week's end as the spring winds become increasingly tighter,' he wrote in a note. In company news, shares in Cettire have rallied 10.5 per cent to $0.32, but comes after shares slumped 31 per cent in a single trading day last week on a less than favourable trading update. Shares in uranium producer Boss Energy rose 4.3 per cent to $4.66 after announcing its operations in South Australia have met its first-year production guidance.
News.com.au
2 hours ago
- News.com.au
Treasurer Jim Chalmers ‘looking broadly' at policies with National Press Club address
CreditorWatch Chief Economist Ivan Colhoun discusses Treasurer Jim Chalmers' government financial agenda speech at the National Press Club. 'The really positive thing there was they are not wasting the majority they won at the election,' Mr Colhoun told Sky News Business Editor Ross Greenwood. 'He actually used that three-letter GST acronym, which has just been off the agenda for any political party, so he is certainly looking broadly and trying to look at what are the themes and policies that need to be addressed.'
