Administrations show increase in last two months but this is not the whole story

1 July 2013

So the economy has been improving and the administration figures are showing a slight increase according to FRP advisory.  However they have only looked at two months of the year and compared it to the first two months.  Ie comparing April and May to February and March.  This is not comparing like with like.   So we need to look at the figures from year to year ie seasonally adjust them.  The number of administrations is still falling year on year with Q1 of 2013 some 29% lower than 2012.  In Scotland the administrations are now down some 73% in April and May when compared to the same period last year.The Markit/CIPS Manufacturing Purchasing Index (PMI) jumped to 52.5 from an upwardly revised 51.5 in May, data showed on Monday, beating analysts' forecasts for a reading of 51.5.  This is the highest level since May 2011. All this suggests that the economy is improving which will be a good backdrop for The new incoming Governor of the Bank of England as he looks to boost growth further. However it should still be remembered that when the economy starts to pick up speed then their is likely to be an increase in insolvencies as weaker companies give way to stronger ones and banks become more partial to reallocating funds.