 |
|
|
|
© Business-Money.com Ltd 2013 |
|
|
|
The most recent Begbies Traynor Red Flag Alert research, which monitors a series of indicators of UK company distress, shows that manufacturing is recovering against a tide of continued business distress across the country that is affecting many sectors. The underlying year-on-year trend showed a fall of 17% in combined distress when compared with the same period in 2011, indicating early progress away from another recession. However, seasonal trends consistently show increased levels of distress in this quarter after the pre-Christmas retail and leisure spending peak. Combined instances of UK business distress again followed this pattern, rising 55% in the first quarter of 2012 compared with the previous three months, indicating the potential fragility of the recovery. Among the business sectors that showed positive results, the manufacturing sector as a whole led the way with very pronounced year-on-year falls in combined distress. Food and beverage producers’ distress fell by 37%, print and packaging firms saw 73% fewer instances of distress, and other manufacturing businesses saw levels fall by 49%. Julie Palmer, a partner at Begbies Traynor, said: “Manufacturing is the star of the economy at present, and the engine that could drive a recovery. Indeed, food and beverage manufacturers were the only sector to see falls in both year-on-year and quarter-on-quarter distress. “Key manufacturing centres, including London, Manchester and Birmingham, have seen falling critical distress over the past quarter when compared with the previous three months, and also compared to a year ago.” There were significant problems during Q1 2012 in the property services sector, which showed a 122% increase in distress, and the construction sector, which showed a 104% increase in distress. This indicates that while private sector manufacturers are leading the green shoots of the economy, public spending cuts are still hitting many companies hard, as long-term infrastructure and construction contracts are being held over or shelved. Begbies Traynor Group chairman Ric Traynor commented: “We have seen numerous construction firms, contractors and suppliers restructure or withdraw from markets recently, and there are concerns that the impact of the sustained spending freeze on this sector is being masked by the fact that many sub-contractors are not immediately counted in government unemployment numbers. “There is a great deal of consolidation and contraction still to come in this sector, and this will leave the UK short of capacity when the spending constraints loosen and projects are back on the horizon again. “Although business distress levels are up 59% from the last survey of Q4 2011, the overall year-on-year total of instances of combined distress is down 17%, a welcome sign that the manufacturing sector, aided by low interest rates and a competitive pound, is leading the economy gradually back towards improved financial health.” Other Business Money News
| ||||||||||||||||||||||||
Business
Money delivers news, reviews, research, comment and
analysis to financial intermediaries, bankers, lenders,
and SME decision makers and
supports these finance
professionals with timely, relevant and accurate market
intelligence and sources of business funding.
