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By unknown | Mar 24, 2009 | COMMENTS [ 0 ]

Robert Laing and Sapa

Robert Laing and Sapa

Bankruptcies in February jumped 70percent from a year ago, Statistics SA reported yesterday.

The worst hit sectors were financing, insurance, real estate, and business services, which accounted for about 40percent of the 391 businesses liquidated.

Next were wholesale and retail trade, catering and accommodation, making up 30percent of the total.

Credit Guarantee senior economist Luke Doig said the official data reflects what rating agencies are seeing. Liquidation data was distorted by last year's civil service strike, but the past three months have seen an alarming rise in bankruptcies.

"Going through the historical data, this looks like the worst we have seen since the recession of 1991, perhaps even the 1970s oil crisis," Doig said.

The bulk of company liquidations were voluntary, with only 26 court-ordered liquidations out of the 391.

Individuals or partners declared insolvent jumped by 39percent to 143 in January from the same month last year.

Insolvencies hit a peak of 399 in October and Stats SA has reported a decline in its past three-monthly releases. Insolvency data lags behind that of liquidations by a month.

The improvement in insolvencies might reflect the 1,5percent easing of interest rates since October, with another 1percent or more expected this afternoon when Reserve Bank governor Tito Mboweni announces the monetary policy committee's decision.

But some analysts have attributed this to a lag caused by the National Credit Act giving people in financial trouble a breathing space for debt counselling before defaulters can be taken to court by creditors.

There was a mild improvement in residential property demand activity levels, FNB said yesterday in its property barometer for the first quarter of 2009.

However, other areas of the survey results pointed towards a bleak picture, the bank said.

"It's probably safe to say that the overall picture is far from convincing - we have a long way to go before we see a sustainable recovery," John Loos said. - Sapa


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