The macro picture behind a rising wave of business failures is evident in the latest September 2025 quarter data released by Stats NZ
- Total filled jobs have started to fall year-on-year.
- Construction is under sustained pressure on both employment and revenue.
- Accommodation and food services are recovering, but profitability is volatile.
- Cost inflation has cooled, but not disappeared, especially in business inputs.
Employment
Total filled jobs fell from 2,256,000 in September 2024 to approximately 2,234,000 in September 2025, a 1.0% year-on-year decline (-0.99%) and 3.8% below the peak levels seen in December 2023, indicating the labour market has moved from expansion to mild contraction. (Business employment data: September 2025)
Construction stands out with filled jobs falling from 182,400 in September 2024 to 172,800 in September 2025, a 5.3% year-on-year drop. The measures in Stats NZ Linked Employer–Employee Data (LEED) show that falling job creation and rising job destruction closely coincide with periods of elevated business exits.
Earnings volatility is often most significant in smaller firms, the same group is most exposed to cash flow shocks. Given that government figures classify 97.3% of employers in the construction industry as SMEs (number of employers, not total employment share), it is no surprise that the sector accounts for over 25% of liquidations.
Other sectors hit hard include administrative and support services (-3.6%), accommodation and food services (-1.2%), professional, scientific and technical services (-2.7%), and manufacturing (-2.5%). The current pattern of modest but broad-based employment declines, particularly in construction and hospitality, is consistent with a rising insolvency pipeline over the next 6–12 months.
Financial Performance: Revenue Down, Wages Sticky, Margins Squeezed
The Business financial data: September 2025 quarter provides a more granular view of sector-level turnover, wage costs, and profitability.
Returning to the construction industry:
- Construction sales were about $25.3b in the September 2023 quarter,
- Fell to $23.4b in September 2024 (-7.4% year-on-year), and
- Fell again to $22.7b in September 2025 (-3.2% year-on-year from 2024).
Over two years, that is roughly a 10.2% decline in quarterly sales for the sector. On the cost side, salaries and wages for construction have decreased by only about 4% over the same period. The effect on profit?
- Around $3.22b in September 2023,
- Down to $2.81b in September 2024 (-12.7% vs 2023), and
- Only $2.83b in September 2025 (about 12% below September 2023 levels).
Implication for insolvency
Revenues have dropped materially, wages have adjusted only gradually, and operating profits remain significantly below their pre-slowdown peak. This is the classic recipe for increased reliance on tax arrears, higher use of short-term high-cost finance, and a greater incidence of cash-flow insolvency, particularly among subcontractors and smaller builders.
For the Accommodation & food sector, top-line recovery has taken effect:
Seasonally adjusted sales fell from about $5.37 billion in September 2023 to $5.20 billion in September 2024 (-3.2% YoY). By September 2025, sales had recovered to about $5.51b, a 6.0% year-on-year increase from September 2024 and back above the 2023 level. Operating profit remains volatile:
- Around $415m in September 2023,
- Down to $216m in September 2024,
- Then up to $276m in September 2025 (27.8% year-on-year increase from the 2024)
Implication for insolvency
Many hospitality businesses are experiencing top-line recovery but from a weakened base, with higher wage bills, residual COVID-era and interest-rate debt, and greater exposure to rent and landlord pressure.
Retail, transport, and manufacturing have also seen a higher rate of margin compression, with sales not recovering to 2023 levels, contributing to many “margin-starved” insolvencies: businesses that are busy but still unprofitable, often with substanital tax debts.
Price Pressures: Inflation easing, costs still high
The Business Price Indexes: September 2025 quarter show how price pressures have evolved. Output prices for all industries were up only 0.6% in the year to September 2025, compared with 1.5% in the year to September 2024 (year-on-year).
Input prices were up 0.2% year-on-year in September 2025, down from around 2.0% a year earlier. Quarter-on-quarter, input prices still rose about 2.8% in the September 2025 quarter, signalling that short-term cost spikes remain a risk.
Even though inflation rates have slowed, absolute price levels remain elevated: The “slow bleed” of input costs (materials, fuel, wage inflation) continues to erode margins, especially in construction, manufacturing, and transport.
Insolvency tailwinds for 2026
Margin pressure, elevated costs, and revenue volatility remain defining features of the current economic environment. While 2025 has delivered some recovery compared with 2024, many sectors continue to sit well below their 2023 levels for employment, sales, and operating profit. With many businesses already on the brink of exhaustion, the elevated insolvency levels seen from 2023 to 2025 are likely to continue into 2026 and beyond.
Practical messages for directors and lenders
In conversations with boards, owners, and lenders, the data supports some clear messages:
- Stress-test cashflow: A 5–10% revenue fall in sectors like construction or hospitality is not a remote scenario; it is effectively what the Stats NZ time series already shows for many operators.
- Watch wage and tax arrears closely: As LEED reminds us, falling employment and volatile earnings patterns are leading indicators of distress. Unpaid PAYE and GST remain the most common early warning signs.
Stats NZ - Interrogate 2021–2023 asset values: Cost-inflated equipment and vehicles often cannot be realised at their book values. This matters for both secured creditors and directors considering their solvency position.
- Engage early on restructuring options: The earlier insolvency practitioners are involved, the better the chance of consensual restructures, orderly sales, and better outcomes for employees and creditors.
