The rate of businesses insolvencies declined 18% in May compared to April, according to data released by Experian.

The rate of firms going out of business fell to 0.08% from 0.10% in April. This is now at the lowest rate since January this year and the third consecutive month that insolvencies have declined.

The largest improvement came from small and medium-sized businesses with between 51 and 100 employees – firms of this size saw insolvencies fall from 0.24% in April 2010 and 0.23% in May 2009 to 0.13% in May 2010 – the lowest point since September 2007.

“The fall in the number of insolvencies is a good sign and shows that businesses are distinctly aware of the current environment and are taking vital steps to protect themselves from risks,” said Rolf Hickmann, managing director of pH, an Experian company.

“Apart from the very largest businesses, companies of all sizes saw marked improvements in insolvency rates. However, the greatest improvement came from the medium-sized businesses, which, as we have commented in previous months, have been the hardest hit by the recession.”