Year end slowdown hits mnufacturing sector
17 January 2007
Manufacturing in the UK performed well in 2006 but last quarter sounded a warning as failures increased according to 2006 Equifax Business Failures Report
London 16th January 2007 - The Manufacturing sector in the UK showed improved performance across 2006 with an overall drop in business failures of just over 2% year on year, according to leading credit information specialist Equifax, in its 2006 Business Failures Report. However a warning note was sounded in the last quarter when failures in the Manufacturing sector increased 11.3% compared to the same period in 2005.
“Those last quarter figures may be a timely warning for the Manufacturing sector” confirmed Neil Munroe, External Affairs Director, Equifax. “Businesses of all sizes need to remain vigilant on the issues of credit worthiness of existing customers and new prospects. The picture can change quickly and it is particularly important for manufacturers to use the latest online tools to ensure their trading position is not being exposed by new or existing business relationships.”
The Construction sector, however, fared much better during 2006 than other business markets. Seasonal trading patterns may well have been the underlying cause of a much poorer performance on the UK High Street with the Retail sector recording the highest level of business failures across 2006 despite December’s pre-Christmas spending. The increase in business failures across the Retail sector for January to December 2006 was up 17.2% compared to the same period in 2005 painting a gloomy picture only slightly improved by the news that the final quarter of 2006 showed a better year end with a lower increase in failures of just 11%, year on year.
The Wholesale sector failures over the year only rose by 4.9% compared with 2005. However even here the final quarter was ominous with failures up by 6.6%. The Transport and Communications sector fared better with an increase in failures of just 4% while Construction did even better with failures increasing by only 1.1% compared to 2005. And a more encouraging picture was revealed by the Services sector with a drop in the number of business failures of 7.7% compared to 2005.
In the light of these figures Equifax urges businesses of all sizes to protect themselves by putting in place risk management procedures including basic credit checks. Many of the year end figures indicate that it is still the smaller businesses that remain particularly vulnerable.
“Small businesses are more vulnerable to the impact of bad debt and fraud yet many of these types of organisations fail to take even the basic steps to protect themselves,” concludes Neil Munroe. “The small to medium business can benefit from the latest online tools that allows them to check on the customer’s or prospect’s current credit worthiness instantly so that they know exactly who they are doing business with.”
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