The amount of bad debt among construction companies plummeted 39 per cent year on year in Q2 2018, according to Creditsafe’s latest Watchdog report.
Bad debts (those written off by businesses) that were owed to construction companies were down from £15.8m in the second quarter of 2017 to £9.6m for the same period of 2018.
In addition, the amount of bad debt that construction companies owed to other firms fell to £50.2m in Q2, down 47 per cent from £94.2m in the same quarter last year.
There was further evidence of improving conditions in the number of active companies, which jumped from almost 358,000 in Q2 2017 to more than 413,000 a year later.
The number of insolvencies in the industry meanwhile fell from 934 in the first quarter of the year to 888 in the second, despite the ongoing fallout from Carillion’s liquidation.
Creditsafe UK chief executive Chris Robertson said the latest figures suggested the industry was bouncing back from a difficult first quarter.
“With positive indicators this quarter showing a fall in failures, coupled with a small but defiant increase in active companies, the sector seems to be getting back on track,” he said.
Recent PMI data showed activity and new orders hit their highest levels of 2018 in June, which some commentators suggested was the result of investment held back in the first quarter now coming through.
Mr Robertson warned against complacency though and said businesses needed to “protect themselves from potentially risky partnerships” as the impact of Carillion’s collapse on the industry could still worsen.
There was some indication in the latest data that industry demand could be weakening, as overall sales were down to £296.6bn in Q2 from £306.1bn a year ago.