Australia’s mining sector has been ranked third for business insolvencies, with the average rate of insolvencies across all sectors hitting 38% in May this year.
According to financial services provider CreditorWatch’s Business Risk Index, Australian insolvencies — those businesses in a state of financial distress — have reached record highs, with the mining industry suffering a 72% year-on-year increase.
CreditorWatch says the mining industry’s insolvency rate has risen steeply for both small and large businesses.
The electricity, gas, water and waste services industry is ranked first, with an 89% year-on-year increase, followed by education and training, which saw an increase of 87%.
The increases, according to CreditorWatch, were driven largely by high inflation, interest rate increases, and declining consumer demand.
CreditorWatch CEO Patrick Coghlan says the combination of deteriorations in the key measure of business health reflects the increasing impact of cost-of-living pressures on consumers.
“We don’t expect a meaningful turnaround in consumer confidence until the impact of at least two rate cuts has been felt, which won’t be until well into 2025,” he says.
The company notes that the total number of insolvencies is up 34% year-on-year, and 41% above its pre-COVID maximum.
Write to Aaliyah Rogan at Mining.com.au
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