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Construction insolvencies down on last year

Construction insolvencies fell in July to 271 firms, compared to 382 in July 2009, according to new figures published by information services company Experian.

In a sign that the market may be improving for construction companies, 29 per cent fewer firms were declared insolvent in July this year, comapred to 2009.

This is the equivalent of 0.16 per cent of companies in the sector and compares to 0.23 per cent, which failed in July last year.

In total, 1,542 UK businesses failed last month, 33 per cent fewer than the 2,312 insolvencies recorded in July 2009. This equates to an insolvency rate of 0.08 per cent of the business population in July 2010, compared to 0.12 per cent the year before.

While this shows the construction sector underperforming the national average, the reduction in firms going to the wall is very positive.

Recent figures from the ONS suggest that the sector has been recovering strongly over the last few months, with growth in construction output of 8.6 per cent in the second quarter of the year.

Despite this growth, some industry observers have expressed caution.

Construction Products Association chief executive Michael Ankers said: “The ONS figures show the strongest quarterly increase in output in nearly 50 years, but they flatter to deceive. Construction was particularly badly hit by the poor weather in the early part of the year and so the second quarter was always going to see a sharp pick up.

“In addition, a number of public sector projects were started in the run up to the Election and this undoubtedly helped boost output in the spring.”