The data suggests that the Reserve Bank’s interest rate hikes are starting to take effect and that the economy may have reached its inflation peak at 6.9 per cent.
The report showed that employment and GDP growth also remain strong, and consumers are still sitting on high levels of savings, albeit lower since interest rates began rising.
However, CreditorWatch’s key trade indicator, trade receivables, continues to trend downwards, while external administrations leapt 26 per cent from October to November and are up 24 per cent year-on-year.
The number of credit inquiries undertaken by businesses has increased by 87 per cent year-on-year and is up 61 per cent since last month, reflecting increased caution among businesses and consistent with declining business confidence.
Other key Business Risk Index insights for November show that month on month, B2B payment defaults continue to show a high degree of volatility, decreasing by 25 per cent from last month, whilst following a generally increasing trend and that court actions are down 6 per cent year-on-year.
Yarra Ranges in Victoria is the region with the lowest insolvency risk (across regions with more than 5,000 businesses), followed by Cottesloe-Claremont in Western Australia.
The Western Sydney regions of Merrylands–Guildford and Canterbury are the regions at highest risk of default across Australia (for regions with more than 5,000 businesses).
CreditorWatch chief executive Patrick Coghlan said businesses are right to take a cautious approach ahead of the Christmas/New Year period.
“Flat year-on-year trade growth in the month of November points to subdued trade activity in December; however, it appears that the RBA’s rate rises this year are beginning to bite and having the desired impact on inflation. There are still a lot of challenges out there for businesses, but bringing inflation down would bode well for 2023,” Mr Coghlan said.
CreditorWatch chief economist Anneke Thompson said that while the November BRI data covers businesses across all industries, the subdued trade receivables data does mirror October’s retail trade data.
“Monthly turnover fell across all the major retail trade categories, with the exception of food retailing. Department stores recorded the biggest drop in turnover, at 2.4 per cent followed by clothing, footwear and personal accessory retailing, which dropped by 0.6 per cent,” she said.
“While we are likely to see a bump up in retail trade activity when November data is released due to Black Friday sales, it seems that interest rate rises and a general higher cost of living are now starting to be felt by both consumers and businesses. This will be positive news for the RBA, whose board members will be closely watching for all signs of a slowdown in the economy, and hopefully, a fall in the inflation rate.”