Business trading conditions have hit record highs as the nation’s economy recovers from the coronavirus pandemic but analysts are warning there are signs of weakness in sectors such as construction that could lead to insolvencies.
CreditorWatch chief economist Harley Dale said the share of all administrations made up by construction firms fell from 24 per cent late last year to 15 per cent by January. There has been improvement in activity for the residential building industry due to the federal HomeBuilder grant and state government support programs.
“In the office market we are already seeing some downsizing [from businesses] and not everyone is going to return to an office environment,” he said. “It’s the non-residential part of the market we need to keep an eye on post-JobKeeper. The sector is going to be smaller than it was pre-COVID.” “The strength in conditions alongside high levels of capacity utilisation, point to an economy that is continuing to grow at a relatively healthy rate as we transition through the wind-up of the JobKeeper program and beyond.”
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