Page 17 - HW August 2020

stats watch
Statswatch Jun-July 2020
OUR KEY STATS this month come with a warning that some of the effects of the Covid-19 lockdown have not yet come to the surface...
• Risk data outlook is positive – for now.
• June consents rebound but has April just shifted sideways?
“BUBBLE” INFORMS SECTOR RISK
Our exclusive data from CreditWorks Data Solutions (www. creditworks.co.nz) assesses with a high degree of accuracy the level of credit risk posed by a particular industry sector.
Our new “debt risk market analysis” reports for the period May-July 2020 show how much of four key industry sectors presents the most likelihood of failure in the next 18 months.
What can we derive from this latest data? In summary, reduced risk... for now.
CreditWorks’ GM, Alan Johnston, comments: “The flourish of retail and construction spending has had the effect of reducing risk in the higher percentage bands.
“All the key indicators, along with market noise from the retail and wholesale sectors, are suggesting spending is at levels not seen before.
“All the key sectors are up on last year and Kiwis are spending like there is no tomorrow – even new cars and property are selling at unprecedented levels.
“A lot of this is expenditure that didn’t occur during lockdown that normally would have been spent in overseas travel.”
So far so good, what about the outlook?
Without beating around the bush: “New Zealand is in for a rude awakening after 1 September,” believes Alan Johnston.
“Some 70% of the workforce (1.75 million jobs out of a total 2.5 million) is benefitting at present from the Government subsidies which cease after that date.
“Unemployment is expected to rise from that point on, from the current 6% approximately, to over 9% as more companies close and the absence of external spending (tourism and foreign students particularly) continue to have an impact.
“Adding to this the traditional credit risks associated with Christmas and we are looking at a particularly bleak close to the year and for 2021.
“As a result, we can expect these risk band profiles to show significant change in the latter stages of this year.”
CONSENTS SEE COVID-RELATED REBOUND
Without wishing to be totally negative, the same “waiting for the bubble to burst” outlook might also be applied to building consents.
“June 2020’s figures are clearly coloured by the inevitable rebound from the pandemic-driven negatives seen across the April-May months”
For now however, June 2020’s figures from Stats NZ (www. stats.govt.nz) are clearly coloured by the inevitable rebound from the pandemic-driven negatives seen across the April- May months.
By value, consents for the June 2020 month were as follows: • Residential: $1.4 billion (+11.2% on June 2019).
• Non-residential: $753 million (+49.7%).
• Total: $2.2 billion (+24.0%).
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