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Mon May 20 2024

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Construction failure rate slows

5 Nov 12 Administrations in the construction industry dropped 24% in the third quarter of 2012 on the previous quarter.

Voluntary liquidations figures were also 7% down over the previous quarter and 17% down year-on-year, according to the latest statistics from The Insolvency Service.

The slowing of construction failures was even better than across the economy as a whole, although the data also suggests construction is lagging behind the wider trends. Across all industry sectors, there was a quarter-on-quarter decline of 12% for administrations and 2.8% for liquidations.

Baker Tilly restructuring and recovery partner Mark Wilson commented: “These numbers fly in the face of the Office of National Statistics numbers released last month, which revealed that construction output for the three months to August 2012 was 11.6% lower than the corresponding quarter in 2011. Forecasts for growth in the sector are not strong, with a generally held view that growth has stalled until 2014.

“Whilst the insolvency figures should be welcome news, there must be a concern that they are lagging behind the trends being currently experienced in the industry. We still consider this sector to be one that will continue to experience pressure over forthcoming months, particularly if harsh weather strikes.”

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