Among private companies that are likely to default, those in the construction industry topped the list, according to new data from research firm Sageworks Inc.

The average probability for default for construction companies from Dec. 31, 2010, to Dec. 31, 2011, was 5.73%.

While the industry was ranked first among all private companies tracked in Sageworks' database, construction companies showed significant improvement from Dec. 31, 2011, to Dec. 31, 2012, at 3.79%.

Rounding out the list of private companies that were likely to default during the time periods of Dec. 31, 2010 to Dec. 31, 2011  and Dec. 31, 2011 to Dec. 31, 2012, respectively, were:

• Manufacturing                                                          3.34%              3.37%
• Wholesale trade                                                       3.47%              3.45%
• Retail trade                                                             3.95%              3.63%
• Professional, scientific and technical services              4.70%              4.60%

“The average probability of default we are showing for private companies in our database is consistent with the sales performance and profitability we've reported for those companies,” said Libby Bierman, an analyst with Sageworks. “Their revenues and profit margins continue to increase, though maybe not at the high rates we saw after the recession and in 2011.”

One bright spot is that privately held U.S. companies, on average, have a slightly improved credit position than a year ago, according to Sageworks.

Using a predictive statistical model to evaluate privately held companies in Sageworks' proprietary database, the firm said it found that the average probability that a private company would default in the next year was 4.40% for the 12-month period ended Dec. 31, compared with 4.51% for the year-earlier period. 

“It makes sense that more profitable companies with less debt on their balance sheets will be a lower credit risk. A tenth of a percent change may not seem significant, but it is a move in the right direction,” Bierman said.