Latest / Best of Business / Gareth Kiernan: Infometrics Chief Forecaster on the number of businesses reporting losses

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Gareth Kiernan: Infometrics Chief Forecaster on the number of businesses reporting losses · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks'd be follow
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  Speaker 2: Economists are a little bit worried about the number of
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  Speaker 2: businesses posting a loss. IID data from the twenty twenty
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  Speaker 2: three tax years showed one in five businesses made a loss.
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  Speaker 2: That's one hundred and seven businesses, one hundred and seven
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  Speaker 2: thousand businesses obviously in total. Gareth Kennan is Infametric's chief forecaster. Hey, Gareth, evening, Heather, Now,
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  Speaker 2: it's a bit of debate about these numbers. Is it
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  Speaker 2: one in five or is it actually one in three?
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  Speaker 3: Well, there's about a third of businesses when you look
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  Speaker 3: at those numbers that record it neither a profit nor
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  Speaker 3: a loss zero and comes. So my feelings those ones
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  Speaker 3: should probably be taken out of the numbers because it
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  Speaker 3: looks like they're not operational, probably not even you know,
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  Speaker 3: sort of a real business in a sense. So you
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  Speaker 3: probably get a better steer just looking at the numbers excludingized.
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  Speaker 2: Ones, and that takes us to what one in three?
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  Speaker 3: Yes, sense right?
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  Speaker 2: Yeah, okay, Now tell me you understand this better than
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  Speaker 2: I do. But if we have an increase in the
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  Speaker 2: current loss share from thirty two point three percent to
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  Speaker 2: thirty four points six percent.
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  Speaker 3: That doesn't seem that bad, no, I mean, I was
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  Speaker 3: surprised by the sort of lack of movement and the numbers.
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  Speaker 3: When you look at the data over the last seven years,
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  Speaker 3: they haven't really swung around a lot. The changes seem
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  Speaker 3: to be pretty marginal. The other thing that surprised me
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  Speaker 3: is the fact that you know, you are talking a
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  Speaker 3: third of businesses that are making a loss in any
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  Speaker 3: given year, and you would hope that across the economy overall,
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  Speaker 3: that things were a little more profitable when times were
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  Speaker 3: going good. But it doesn't seem to be the way
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  Speaker 3: the numbers work out.
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  Speaker 2: You Now, why would it be that it hasn't got given?
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  Speaker 2: I mean, we are talking about having a recession. Some
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  Speaker 2: say the worse than thirty years, some say the worst
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  Speaker 2: than fifty years. Whatever it is, it's bag how come
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  Speaker 2: it hasn't gone up more than that?
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  Speaker 3: Look, it may just be a reflection that there's sort
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  Speaker 3: of an uneven distribution across you know, companies making losses.
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  Speaker 3: We don't know how big those losses are, and they
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  Speaker 3: might have been quite previous years, and there might be
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  Speaker 3: more loss making going on, So you know, it's a
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  Speaker 3: case of I guess having to look at some of
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  Speaker 3: the other indicators around how businesses are performing out there
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  Speaker 3: as well and just trying to get a steer on them.
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  Speaker 3: But you know, over the last two years, those numbers
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  Speaker 3: at least suggesting there are more business is making a loss.
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  Speaker 3: So it is consistent with the deterioration and the economy
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  Speaker 3: that we have seen.
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  Speaker 2: Is it possible that because this is the twenty twenty
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  Speaker 2: three twenty four tax here, that actually we're not seeing
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  Speaker 2: the ugliest stuff yet.
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  Speaker 3: Yeah, that's right. I mean when you look at the
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  Speaker 3: numbers and the way the economy performed, it was kind
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  Speaker 3: of flat through twenty twenty three through that, and so
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  Speaker 3: that's still been captured in the twenty four year, like
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  Speaker 3: you say, and the worst of that recession we know,
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  Speaker 3: was through the middle part of last year, so in
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  Speaker 3: the twenty twenty five tax year. So it could well
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  Speaker 3: be that over the next twelve months or so, as
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  Speaker 3: we get more data through you do see more of
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  Speaker 3: a deterioration and those figures coming out.
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  Speaker 2: Yeah. Now, we have been spending a lot of time
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  Speaker 2: because everybody's feeling gloomy in the middle of winter and
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  Speaker 2: feeling a bit poor. We've been spending a lot of
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  Speaker 2: time just thinking about the economy. What is your forecast
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  Speaker 2: for when we start to feel decent about what's going on.
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  Speaker 3: Yeah, Look, the one thing that's really holding us back
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  Speaker 3: as far as I'm concerned, is the labor market. You know,
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  Speaker 3: we were hoping that the unemployment rate would peak in
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  Speaker 3: them this year and start to track lower. We've pushed
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  Speaker 3: out the timing on that, but the real concern for
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  Speaker 3: me is when you look at things like job ad
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  Speaker 3: numbers or monthly job figures, they've gone sideways for the
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  Speaker 3: last year or so and there's not really any sign
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  Speaker 3: of an improvement there. And my feeling is that until
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  Speaker 3: you start to get that labor market turning around, until
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  Speaker 3: there's an improvement in people's sense of job security and
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  Speaker 3: income security around that, even though interest rates have been
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  Speaker 3: coming down and people of not having to pay as
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  Speaker 3: much on the mortgage, they will still be cautious on
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  Speaker 3: their spending for some time. So it could well be
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  Speaker 3: into late late this year or early twenty twenty six
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  Speaker 3: before that household spending starts to pick up, and of course,
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  Speaker 3: at that time we should start to see more spending
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  Speaker 3: coming through in provincial areas with the good export crisis
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  Speaker 3: that we've had as well.
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  Speaker 2: Good stuff, Gareth, Thanks for your time. Gareth Kenan, Informetric's
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  Speaker 2: chief forecasted.
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