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

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

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

Rounding out the list of private companies that were likely todefault 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%
• Wholesaletrade 3.47% 3.45%
• Retailtrade 3.95% 3.63%
• Professional, scientific and technicalservices 4.70% 4.60%

“The average probability of default we are showing for privatecompanies in our database is consistent with the sales performanceand profitability we've reported for those companies,” said LibbyBierman, an analyst with Sageworks. “Their revenues and profit margins continue toincrease, though maybe not at the high rates we saw after therecession and in 2011.”

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

Using a predictive statistical model to evaluate privately heldcompanies in Sageworks' proprietary database, the firm said itfound that the average probability that a private company woulddefault in the next year was 4.40% for the 12-month period endedDec. 31, compared with 4.51% for the year-earlier period.

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