Credit bureau Equifax has identified an increase in the mortgage arrears rates of construction industry small business owners and sole traders, which may be an indicator of a downturn in the sector.
Equifax said SME directors and sole traders in construction are significantly more likely to be in arrears, compared to the average consumer.
Equifax executive general manager, product, marketing and sales, Moses Samaha, said the company is also seeing an increase in construction industry insolvencies, which are 28 per cent higher on a rolling 12-month basis
Samaha said: “The outlook is for more to come. The construction industry is a critical part of our economy and any emerging risks can have a ripple effect on the broader market.”
Equifax is also seeing increasing insolvency volumes in the accommodation and food services industry and the professional services industry.
In accommodation and food services, ASIC reported 42 companies going insolvent in February. This is 60 per cent below pre-pandemic levels but 20 per cent higher than the same month last year.
“Credit wind-ups, the most common form of insolvency, are on the rise,” Samaha said.
Equifax has seen reduced credit demand in several sectors, including wholesale trade, professional services, construction, accommodation and food services.