BUSINESS FAILURES RISE, START-UPS FLOUNDER IN Q3

Business failures across Australia soared during the third quarter of 2016. According to Dun & Bradstreet’s latest analysis of New and Failed Businesses, the number of business failures rose 11.0 per cent in Q3 2016 compared to the same period last year, and 42.0 per cent on the previous quarter. Meanwhile, the number of new businesses declined 2.3 per cent on the previous year, and 13.7 per cent on Q2 2016.

The sudden increase in business failures in Q3 2016 stands in stark contrast to an 18.3 per cent decline between the first and second quarters of the year. Similarly, the fall in business start-ups was preceded by a three-year high of businesses created during Q2 2016. The results indicate business conditions for start-ups may not be as favourable as the confident outlook reported by established businesses in Dun & Bradstreet’s latest Business Expectations Survey.

During the three-months ended September 2016, 62,073 new businesses were created in Australia, down from 71,963 in the previous quarter and 63,502 during the same period last year.

The total number of business failures during Q3 was 15,116, up from 10,642 in Q2, and 13,615 in Q3 2015. The number of failed businesses in the September quarter was the highest since Q1 2013.

State-by-state comparison

New South Wales remains the engine room for start-ups nationally despite a 6.60% decline on a record 24,183 new businesses during Q2 2016. In terms of sheer numbers, New South Wales’ lead is followed by Victoria, although start-ups have declined on both annual and quarter-to-quarter bases in the state. While all states and territories reported fewer start-ups compared to Q2 2016, South Australia and the Northern Territory experienced notable increases of 16.3 per cent and 14.2 per cent, respectively, compared to Q3 2015.

Business failures nationally were up significantly between Q2 and Q3, with the ACT, Western Australia and the Northern Territory recording increases well above 50 per cent. The number of failed business was the highest for a single quarter since Q1 2013 for all states and territories, with the exception of Tasmania.

Australian Capital Territory
The Australian Capital Territory saw a 7.5 per cent increase in business failures in Q3 2016 compared to the previous corresponding quarter. On a quarter-to-quarter basis, the number of failed businesses soared 83.0 per cent from 124 to a three-year high of 228. Meanwhile, new business start-ups decreased 16.8 per cent in Q3 2016 compared with Q3 2015. Compared to the previous quarter, new business start-ups declined 3.6 per cent, falling from 1,212 to 1,009.

New South Wales
Business failures in New South Wales increased 14.8 per cent in Q3 2016 compared to the previous corresponding period, rising from 4,592 to 5,271. The result also marked the third consecutive increase on a quarter-to-quarter basis, with business failures up 43.2% in Q3 2016 compared to Q2 2016. Meanwhile, the number of new business start-ups declined 6.6 per cent from 24,183 in Q2 2016 to 22,587 in Q3 2016. Compared to the same time last year, new business start-ups increased 1.8 per cent.

Northern Territory
The Northern Territory recorded a 2.2 per cent increase in business failures in Q3 2016 compared to the prior corresponding period. The number of failed businesses increased 54.2 per cent to 91, compared to 59 in the previous quarter. The number of new businesses in the Northern Territory increased by 14.2 per cent annually, from 211 to 241. However when compared to the March quarter, new business start-ups declined 13.3 per cent.

Queensland
Queensland experienced a 14.9 per cent increase in failed businesses in the September quarter 2016 compared to the previous corresponding quarter, the highest figure in a three-year period. Compared to the June quarter, the figure increased 43.1 per cent. New business start-ups declined by 2.9 per cent compared to the September quarter of 2015, and fell 13.2 per cent compared to the preceding quarter.

South Australia
South Australia recorded the smallest year-on-year increase in the number of failed businesses, with the figure up 1.9 per cent from 528 in Q3 2015 to 538 in Q3 2016. Compared to the previous quarter, business failures were up 36.6 per cent. The state also experienced the largest year-on-year increase in the number of new businesses: it had 2,670 new businesses in the September quarter, up by 16.3 per cent from 2,296 in Q3 2015. Compared to the previous quarter, South Australia recorded the largest decline in new business start-ups, which were down by 20.7 per cent.

Tasmania
Tasmania saw an 11.4 per cent increase in business failures in the September quarter 2016 compared to the previous corresponding quarter, with a 21.0 per cent increase compared to the June quarter 2016. Meanwhile, new business start-ups were up 9.4 per cent from the September quarter of 2015, but declined by 9.1 per cent on the previous quarter.

Victoria
Victoria experienced a 17.8 per cent increase in business failures in Q3 2016 compared to the previous corresponding quarter, with the figure jumping from 3,294 to 3,881. When compared to Q2 2016, the figure marks a 46.8 per cent increase. The state saw an 8.4 per cent decline in business start-ups when compared to Q3 2015, and a 15.7 per cent decline compared to the preceding quarter.

Western Australia
The number of business failures in Western Australia rose 17.2 per cent in the September quarter 2016 compared to the previous corresponding period. When compared to the June quarter, the figure soared 59.0 per cent from 879 to 1,398 – its highest result in three years. Meanwhile, new business start-ups declined 3.6 per cent compared to a year ago, and 13.6 per cent compared to the June quarter.