WELLINGTON - Despite the recent sharp fall in business confidence, credit worthiness inquiries to Baycorp indicate that consumer spending remained firm last month, the debt collection and company information group reports.
"However, there are also signs that 'bad debt' levels are increasing, a combination that adds risk to an uncertain outlook," Baycorp said in its latest business intelligence report.
Credit check inquiries were higher in May, more than offsetting weakness in previous months. Inquiries by the consumer-retail finance sector rose 2.7 per cent on a seasonally adjusted basis compared with April, and 18 per cent on a year earlier.
"That follows a 1.7 per cent decline in April. A similar pattern was repeated across other sectors such as banking, credit cards and motor vehicle finance," the report said.
Recent economic data suggested that domestic economic activity had slowed but - for the moment - was not imploding, and credit was still expanding, it said.
"The key piece to this jigsaw may in fact be that debt quality is starting to deteriorate."
Baycorp noted that the total value of defaulted debts on its database in the past three months was around 25 to 30 per cent higher than a year ago.
- NZPA
Consumer spending still firm
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