The November 2021 CreditorWatch Business Risk Index suggests business activity around Australia is “currently weaker than expected, indicating that the return to pre-COVID levels is now likely to take longer than many pundits had anticipated.”
The Business Risk Index data also showed a jump in defaults, external administrations, payment arrears and court actions from October to November.
However, credit enquiries rose 17 per cent, “indicating that business confidence is improving,” CreditorWatch said.
Melbourne and Sydney CBDs remain the worst performing capital city centres with probability of default at historic high-levels due to depressed trade activity continuing post-lockdown.
Credit behaviour and performance scores are improving among the hardest-hitWestern Sydney suburbs including Bankstown, Burwood, Ashfield and Strathfield.
The nationality probability of default for November was flat - 5.79 per cent, compared to 5.80 per cent for October, Business Risk Index. The probability of default for Sydney and Melbourne CBDs “is at record levels.”
The number of defaults spiked higher by 53 per cent in November. But over the three months to November 2021 defaults were down by 14.7 per cent.
CreditorWatch’s data showed that while business activity remains stubbornly depressed, it is the states that closed their borders (WA and Queensland) where capital cities and industries to continue to operate relatively lockdown-free that are now seeing the strongest bounce backs in metro areas.
“The increase in credit enquiries in November is an encouraging forward indicator of business confidence, however, there’s a long way go before business activity is at pre-COVID levels,” Patrick Coghlan, CreditorWatch’s CEO said.
“Worryingly, trade receivables continued to decline last month, and we also saw significant increases in defaults and administrations.”
The BRI identified the three industries most at risk in terms of payment defaults as construction, accommodation, food and beverage, and transport, postal and warehousing.
The number of external administrations were also up in November – by 15 per cent - the second consecutive increase. This result follows consistent falls from June in the lockdown periods.