The construction industry is getting back on its feet following a turbulent six months, according to a new report.

However, builders’ merchants have been warned that the effect of recent construction collapses is not yet known.

Creditsafe Watchdog tracks quarterly economic developments across Construction and 11 other sectors.

It shows:

• Suppliers’ bad debt and companies’ bad debt fell by 39.4% and 46.7% respectively over the last year

• A drop in bad debt comes despite failures such as Ikon Construction, which ceased trading in May, and Scottish-based Crummock, which entered administration in June

• The number of new companies has risen by over a fifth when compared with the same period a year ago, introducing 16,891 in Q2

• Employment rose by 49.5% over the last year, and by 14.1% in the last quarter

• Total sales were down 3.1% year-over-year, showing that, while there are positive signs for the sector, there is still progress to be made.

Chris Robertson, UK CEO at Creditsafe, said: “After an unstable period for UK construction companies, it seems that we are now seeing a return to growth. With positive indicators this quarter showing a fall in failures, coupled with a small but defiant increase in active companies, the sector seems to be getting back on track.

“However, the full effect of recent construction collapses on the supply chain is yet to be seen and businesses need to be doing their due diligence and protect themselves from potentially risky partnerships.”