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The latest report by a leading business information provider shows that construction and retail industries are early victims of economic slowdown while transport and communication doing well.

The report released by Equifax entitled Business Failures Report shows that failures rose by 10% in Quarter 2 of 2008 when compared to the same period last year. The trend was however bucked by transport and communications.

This trend was set in Quarter 1 when the increase in Failures was at 9.1%. The report says that most sectors are controlling their cash flows and managing business sufficiently enough to avoid closures. However it is the construction and retails sectors that are experiencing the greatest difficulties.

Construction experienced staggering failures of up to 20.3% compared with the same period last year. Neil Munroe, External Affairs Director of Equifax says that “this reflects the downturn in the sector already widely reported.”

Munroe goes on to say that the fortunes of the retail sector were not much better with an “increase in businesses going bust of 15.7%. Whilst recent reports had suggested some buoyancy in the consumer retail sector in May, these figures reflect the impact of difficult conditions over a number of months for those retailers unable to manage cashflow against declining sales.”

While not being hit as badly other sectors have also registered increases in the number of businesses shutting doors. The wholesale sector saw an increase of 7.6%, manufacturing 4.8% and services 3.1%.

Looking at the wider picture, other sectors haven’t been as badly hit. The Wholesale sector saw a rise of 7.6% in businesses going bust, whilst the Manufacturing and Services sectors saw increases of 4.8% and 3.1% respectively.  And, in contrast to the overall gloomy figures, the transport & communications sector actually saw a drop in failures year on year, of 9.3%.

Equifax warns that despite the good news in transport and communications businesses need to continue operating best practice and using risk management solutions to minimise the threat of bad debt. The fact is that rigorous credit checks, supported by ongoing monitoring of customers’ and suppliers’ financial status can go a long way to helping businesses weather the storm.

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Related links

• Equifax