Insolvencies continue to impact construction

The latest figures from auditor PricewaterhouseCoopers (PwC) show that 5126 construction companies collapsed in the UK between the third quarter of 2009 and the end of the second quarter of this year.

By comparison, 4058 manufacturing companies and 3513 companies in the retail sector entered insolvency during the same period. PwC said the figures confirmed that manufacturing and construction have been the hardest hit sectors in the UK since 2009, although there was a slight improvement in the second quarter of 2011, compared to the first three months of the year.

PwC reported -17,7% fewer construction company insolvencies quarter-on-quarter, and -26,5% fewer manufacturing company insolvencies.

But PwC construction leader Jonathan Hook pointed out that the number of insolvencies recorded in the second quarter of 2011 were still +5% up compared to the second quarter of 2010.

"These figures highlight that construction in the UK is a long way from recovery," he said. "Companies working on major infrastructure projects or on large frameworks are still busy, but the picture outside London and the South East is going to continue to be challenging. Work is being bid at very tight margins and I think things could well get worse before they improve."

Meanwhile, PwC partner and manufacturing spokesperson Philip Hines said that while the quarterly manufacturing comparison was encouraging, uncertainty remained over order levels and the strength of any recovery. He warned that this could imply further insolvencies in the second half of 2011.