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A predicted surge in construction insolvencies has so far failed to materialise, with May seeing the number of firms going to the wall fall for the second successive month.

Figures from the Insolvency Service show 349 companies in the sector collapsed in the month, down from 384 in April.

Accountancy firm Price Bailey last month warned that an increase in firms in the sector defaulting on covid loan repayments could indicate a wave of companies going under this summer.

Insolvencies in the construction industry

But such fears have yet to be borne out, with May鈥檚 figure marking a 9% declined on April and significantly down from the recent peak of 419 insolvencies recorded in March.

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But the number of companies that went bust in May remained higher than it was at the start of 2022 and 82% higher than in May last year.

John Bell, director of insolvency firm Clarke Bell, said the economy was in a 鈥渟tate of flux鈥� and that the uncertainty around the future of the UK government could stall it further.

He added: 鈥淭he pandemic has had a significant effect, compounded by the economic uncertainty caused by Brexit, along with other current events.

鈥淒ue to the heavy impact and persistence of these problems, it鈥檚 no surprise that many directors of struggling companies are facing compulsory liquidation.鈥�

Insolvencies declined across most sub-sectors of construction in May, down 15% in the construction of buildings and 6% for specialised construction activities.

But civil engineering saw a slight month-on-month increase, from 21 to 22 firms going bust.