The number of businesses going bust has fallen for the first time in two years, according to figures released by Experian.
Statistics for the third quarter of 2006 revealed that the number of companies going out of business was down by 4.1% on the same period in 2005, bringing the total number of firms going to the wall to 14,216 so far this year.
But while the figures suggest that a strong economy is supporting enterprise, the figures could be misleading, according to Richard Lloyd, managing director of Experian‘s business information divison.
Lloyd points to an overall increase in the rate of business failures during 2006 of 4.4% from last year, mainly caused by the biggest rise in companies going bust since 1999 in the first quarter of this year.
“This illustrates a very mixed picture is emerging and we won‘t know for certain which way the business failure pendulum will swing,” he said.
“While the message about the importance of businesses checking the creditworthiness of their customers and potential prospects is getting through, you can‘t disguise the fact that looking at 2006 so far business failures are on the increase,” he added.
“As a result, businesses cannot afford to be complacent and must ensure that they protect their business and their employees from the threat of insolvency.”
The sectors that have suffered most over the past three months include hiring and leasing, food retailing, food manufacturing, building materials and leisure and hotels, while those that saw a decline in bankruptcies include engineering, textiles, clothing, post and telecommunications.
