The number of liquidations recorded for the three months ended October 2009 decreased by 7.9 percent compared with the three months ended October 2008, Statistics SA said on Monday.

The Pretoria-based agency added that the total number of liquidations recorded for October 2009 decreased by 17.5 percent compared with October 2008.

However, this did not necessarily indicate a recovery.

"It is too early to call a turn in liquidations as the data is subject to high volatility," Investec economist Annabel Bishop said.

Statistics SA said the total number of insolvencies recorded for the first nine months of 2009 decreased by 7.8 percent compared with the first nine months of 2008.

The total number of insolvencies recorded for September 2009 decreased by 37.1 percent compared with September 2008.

Bishop said the declining trend in insolvencies was partly due to a high base last year as insolvencies rose sharply.

Another reason, she added, could be that individuals and partnerships were restructuring their debt repayments, thereby reducing the risk of defaulting.

"Overall the liquidations data indicates that companies continue to be under strain but the pace is showing some signs of slowing," Bishop said.

"Business conditions will still remain challenging over the short term."

Bishop said the moderation in inflation and a low interest rate environment should help boost domestic demand but rising job loses would curtail the recovery.

"While we do not expect any further interest rate cuts, the SA Reserve Bank may look at curbing the rand's strength with a cut at the next Monetary Policy Committee meeting."