Much of new business start-up activity was concentrated in the first six months of 2021.
The first nine months of the year have seen a 28pc increase in new company start-ups across Ireland, versus this time 12 months ago, according to new data published by credit risk analyst CRIFVision-Net.
However, the Q3 quarterly figures suggest that the growth in start-ups was disproportionately concentrated in the first six months of the year, which saw a 42pc increase in start-ups year-on-year (YoY). In contrast, Q3 recorded a more modest growth of four percent, versus Q3 2020.
“This slowdown in start-up growth perhaps reflects a more stable operating environment and a return to business as usual for many industries”
The data also reveals a 24pc decrease in insolvencies in the year to date and a 48pc decrease in Q3 2021, versus this time last year.
“12 months ago, economic commentators and financial institutions were predicting an economic bounce in the second half of 2021,” said Christine Cullen, managing director of CRIFVision-net.
Signs of stability?
A 28pc growth in new start-ups certainly supports this narrative, however, it is interesting to note that this bounce in new start-ups was largely concentrated in the first half of the year, as opposed to the third quarter of the calendar year.
“This slowdown in start-up growth perhaps reflects a more stable operating environment and a return to business as usual for many industries.
“That said, the hospitality and construction sectors continue to try to navigate their way out of the short- and long-term impacts of Covid restrictions. While a year-on-year decrease in insolvencies across the two sectors is at face value certainly encouraging, possibly more telling again is the high number of businesses in these sectors currently classified as high-risk.
“In recent weeks, we have seen positive Central Bank of Ireland growth projections and a largely well received Budget 2022. It is therefore important that we build on this positive market sentiment and critically, that we continue to look for ways to support the most at-risk sectors to bridge out of recent Covid challenges and give them the confidence and infrastructural support to move to a growth mindset as we approach the year end,” Cullen said.
Start-ups by sector
Amongst the top performing sectors in Q3 were leasing (+60pc), utilities (+33pc), manufacturing (+31pc) and finance (+31pc). Other sectors to see double-digit growth include wholesale and retail (+18pc), transport and storage (+17pc) and real estate (+16pc).
Amongst some of the sectors most impacted by Covid-19, construction saw a modest four percent increase in start-ups. Meanwhile the hotel and restaurant sector experienced a four percent decrease in start-ups.
The hotel and restaurant sector saw a 76pc decrease in Q3 insolvencies (33 in Q3 2020 vs 8 in Q3 2021). Construction also recorded a decrease in insolvencies, falling 13pc YoY (16 in Q3 2020 vs 14 in Q3 2021).
Regional Irish start-up activity
A total of 10 counties in the Republic of Ireland experienced a YoY improvement in new company registrations for Q3 this year.
This growth was typically found in counties with large urban populations, including Dublin (+7pc), Cork (+7pc), Waterford (+20pc), Sligo (+19pc) and Kilkenny (+4pc).
The other counties to record quarterly growth include Mayo (+13pc), Clare (+11pc), Carlow (+7pc), Kerry (+6pc) and Wexford (+5pc).
Limerick (-4pc) and Galway (-5pc) both recorded a decrease in new start-ups.
Unsurprisingly, the hotel and restaurant sector continues to be the most at risk sector, with approximately three in five companies (63pc) in this space being categorised as ‘high-risk’. This represents a five percent increase on Q3 2020.
However, this figure still compares favourably to this time five years ago, when 66pc of companies in the sector were categorised as ‘high risk’.
Other sectors to feature prominently in the high-risk category include computers (59pc), construction (58pc), transport and storage (54pc) and wholesale and retail (54pc).