RSS feedsDeloitte's study of the latest administration figures has shown that collapses in the manufacturing and retail sectors fell by more than 40% compared to the previous year, but IPs may be under a heavier workload in the not too distant future.
Lee Manning, reorganisation services partner at Deloitte, said: ‘It is unlikely that these relatively positive administration levels will continue throughout this year. The data demonstrates that it takes some time for shifts in the economic cycle to impact administrations. It also suggests that the downturn may be felt for some time to come.’
Despite the tough economic climate, the number of retail administrations dropped by 43%, while the number of manufacturing companies folding went down by 40%.
‘While the credit crunch bites hard in the City, with lenders all but closed for business at the larger end of the market, the pain has yet to be felt as severely in the manufacturing and retail industries,’ Manning said.
Deloitte breakdowns showed there had been a rise in household related retailers going into administration.
The troubles of these companies, selling furniture, carpets and electrical goods was seen by the firm as a yardstick for the wider market. As consumers start to feel the pinch, discretionary expenditure including house improvements is one of the first items to be struck off the shopping list, the firm said. A rise in administrations in the construction industry is another indicator that consumers and developers are preparing for a harsher climate.
Manning pinpointed the bakery sector as a high-risk area because food manufacturing has been hit hard by the rise in the cost of foodstuff raw materials.
‘The drop in manufacturing administrations this year suggests the sector may be in reasonable health compared with other industries,’ he added. ‘There have been recent reports, however, of a slowdown in output in the sector, so it may be that a less positive story lies ahead.’
