14 October 2010
Business failures report reveals a fall in manufacturing sector failures
The manufacturing sector is leading the way when it comes to survival with the new Quarter 3 Business Failures Report from Equifax revealing a year-on-year fall of 18.2% in the number of manufacturing firms going bust compared with only a 13.4% drop in the number of all kinds of businesses failing.
Looking at the UK picture, the number of failures at 6,646 for the Quarter, brings the level of business insolvency closer to that experienced in late 2007 and early 2008 when the credit crunch first took hold of the economy. However there's a bit of a way to go to reach the levels achieved during the boom years of 2004/2005/2006 when numbers were around 5,500 each quarter.
Head of Equifax commercial information solutions Nic Beishon said: "There is no question that the economy is still fragile, and there is much anticipation about the impact of the Government Spending Review and the VAT increase in January. "But we are hugely encouraged by our latest analysis of the business failures data which suggests a really close focus by all sorts of organisations to keep control on their costs, tackle late payments and bad debts and manage their cash flow.
"Interestingly, the downward trend in failures has been sustained quarter-on-quarter through the year and the manufacturing sector is beginning to reflect this, with a 12.5% drop in insolvencies through Quarter 2 and 3. Across the UK, Quarter 1 saw a 0.5% drop in failures compared to Quarter 4 2009, followed by a more significant 7% drop in Quarter 2. And business performance for Quarter 3 has sustained this pattern with a 7.4% quarter-on-quarter decline in businesses going bust."
For Quarter 3, compared to the second Quarter, the wholesale sector showed the greatest decline in failures at 19.4%. The Manufacturing and Services sectors also appear to have managed sales, debts and cash flow well in Quarter 3 with 12.5% and 11.9% declines in failures respectively.
The Transport & Communications sector contradicted the downward trend in all other markets with a 13.6% increase in failures quarter-on-quarter, although the numbers overall in this sector are quite small and the pattern was certainly not repeated year on year, with a 10/3% decline.
In the regions the strongest performers for Quarter 3 versus Quarter 2 were the West Midlands, showing a 15.7% drop in failures and London with a 14.3% fall in businesses going under.
The East of England, at 13.6% and Yorkshire & Humberside also performed well in Quarter 3, defying any suggestion of a North/South divide in the way the economy is holding up.
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