Rental, hiring and real estate services were among the industries that fared worst as external administrations jumped 14 per cent in Western Australia for the September quarter, as insolvency experts warn that an economic rebound has not yet clearly emerged.
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Rental, hiring and real estate services were among the industries that fared worst as external administrations jumped 14 per cent in Western Australia for the September quarter, as insolvency experts warn that an economic rebound has not yet clearly emerged.
Around 260 WA businesses entered administration in that three month period, up from 228 in the June quarter, according to the latest numbers from the Australian Securities and Investments Commission.
That was down from 300 businesses in the September quarter last year.
Using a year-on year basis insolvencies were 12.7 per cent higher than in the 12 months to September 2015, at 974.
HLB Mann Judd principal Kim Wallman said the numbers highlighted that it was a difficult climate.
“Our enquiry rate for people needing our assistance is certainly greater than it has been,” Mr Wallman told Business News.
“Not always following through to informal appointments, people are reluctant to do that for obvious reasons, but certainly we’re seeing a lot of pain out there.
“Retail, that’s down.
“We’re in West Perth… you can park anywhere, there’s for lease signs everywhere.
“We’re seeing a lot of personal ones as well.”
He said he anticipated that the December quarter may not be any worse than September, although the bad news may hit in March.
For September, 13 retail businesses went into administration, bringing to 55 the total number across the year to September, while there were 22 real estate industry insolvencies in the quarter, for a 12 month total of 43.
Cor Cordis partner Dino Travaglini said there was still pressure in construction, with a dip in dwelling approvals.
That was from around 2,900 in the month of November 2014 to about 2,000 for the same period in 2016.
“We can’t see there being any significant changes around the corner, but the infrastructure programs from the federal and state government may provide a positive input into the economy,” he said.
Nonetheless, retail had held up somewhat better than expected, with turnover steady for the past couple of years, Mr Travaglini said.
FTI Consulting senior managing director of corporate restructuring and insolvency Ian Francis said it was quite a mixed and volatile market.
One positive was the improvement in commodity prices, although he said it would need to be sustainable to feed into the rest of the economy.
“We’re surprised that there hasn't been more insolvencies,” Mr Francis said.
“The banks and the Australian Taxation Office continue to support businesses and they’re being more flexible with their terms in dealing with businesses that are under duress.
“The market has been generally resilient notwithstanding that conditions remain fairly weak here in WA.
“One potential scenario is that we’ll be bouncing at the bottom for a little while, there’s no clear sign that things have turned for the better.
“We’ve still got high vacancy levels in Perth CBD and surrounding markets, that’s always a barometer.
“(And) the sentiment we're seeing is small businesses are finding it difficult.”