'Positive' sign as number of firms closing down falls 17pc
THE number of companies going out of business fell by nearly one-fifth in the last year, as a host of indicators suggested the economy is at last beginning to stabilise.
The news came as the CSO is to publish figures today on how the economy performed in the first quarter.
Data from business-management company Vision-Net shows that 817 companies went under in the first six months of this year, down 17pc year-on-year.
The period has been marked by a number of businesses successfully exiting receivership and the like. DVD-rental business Xtra-vision was saved when the British private equity firm Hilco bought the group earlier this month. Hilco is also in the process of re-opening a number of HMV stores here after they shut their doors earlier this year.
Of the 812 firms declared insolvent in 2013, some 559 were liquidated while 243 entered receivership. The remaining 10 went into examinership.
The number of companies failing was dwarfed by the number of firms that were registered with the companies office. At 21,134, that figure was broadly flat on the same time in 2012.
About 18pc of those businesses that failed were in the professional-services sector, followed by construction with 17pc.
Wholesale and retail companies accounted for 14pc of insolvencies, while real-estate businesses that collapsed took up 13pc. The five worst affected sectors accounted for 72pc of insolvencies so far this year.
Vision-net managing director Christine Cullen said the figures reflected some improvement in the economy.
"The start-up rate is stable, showing that entrepreneurship is a strong trait in the domestic economy.
"However, high levels of personal and banking debt, and limited access to working capital, are hampering our recovery prospects," she warned.
Nevertheless, the figures will be taken as another reminder that the market has, at the very least, stopped falling.
They come a day before the latest quarterly national accounts are published, which are expected to show the economy returned to growth in the first three months of 2013.
Analysts expected GDP to have risen 0.3pc between January and March, compared to the zero growth in the last quarter of 2012.
"The positive signs are that the labour market has improved and that should feed into stabilisation in domestic demand this year," said David McNamara, an economist at Davy in Dublin.
"It's been an export-led recovery but we may be seeing a more balanced picture with potential upside for domestic demand," he added.
It comes as businesses reacted favourably to the latest government survey into lending to small business, which showed more and more firms believe the banks are "open for business".
Chambers Ireland chief executive Ian Talbot commented: "The number of SMEs seeking credit and the number of loan applications approved in full are gradually rising in tandem with further stabilisation of the economy."