Business weathering even more liquidations and insolvencies
Business liquidations and insolvencies continue to rise, according to Stats SA data released on Monday, underscoring an economy that is struggling to grow and facing business confidence at record lows.
The total number of company liquidations grew 13.5% year-on-year in August, while the total for the months January to August grew 13.6%.
The estimated number of insolvencies for July 2019 grew 79.7% as compared with July 2018. In the three months ended July, estimated insolvencies grew by 35.9%.
According to Stats SA, seasonally adjusted insolvencies increased by 32.9% in July 2019 compared with June 2019. This followed month-on-month changes of 14.3% in June 2019 and 21.4% in May 2019.
Total liquidations for the year to end-August amounted to 1,374 — driven by the finance, insurance, real estate and business services sector, which saw 451 liquidations.
This was followed by liquidations of firms not classified into a sector, with 347 liquidations, and liquidations in the trade catering and accommodation sector of 322. The majority, about 88%, were voluntary liquidations.
The rise comes against a backdrop of difficult trading conditions reported by numerous companies, in an economy that has only managed to grow 0.9% on an annual basis. The most recent RMB/BER business confidence index (BCI) plunged to a 20-year low in the third quarter of 2019, to reach levels not seen since the global financial crisis.