The number of construction companies in critical financial distress increased 126% over the past year, according to corporate recovery specialist Begbies Traynor

Its latest survey showed 1,279 firms faced critical problems in the first quarter of 2009, compared with 565 in the same period in 2008.

The definition of companies with critical problems are those with county court judgments totalling £5,000 or more or those that have winding-up petitions against them. Only property services companies showed a greater rise than the construction sector.

The number of construction companies facing “significant” problems also increased over the period – by 59%. Companies with significant problems are those that face court action or have average, poor, very poor, insolvent or out-of-date accounts.

Despite the poor figures, Begbies Traynor said there were some encouraging signs from the housing market. It said: “The residential market has shown an improvement in buyer interest, viewings and sales during the first quarter.”

Meanwhile, accountant Pricewaterhouse Coopers said nine construction firms were going bust every day. It said 829 construction companies entered insolvency in the first quarter of 2009, up 60% on the same period in 2008 and 15% on the last quarter of 2008.