Link: Japan business failures log first drop in 29 months in August

The number of corporate bankruptcies in Japan decreased for the first time in over two years, recording a 4.8% drop in August with 723 cases. This decline is attributed to companies successfully passing on higher costs due to inflation.

Despite the recent decrease, Tokyo Shoko Research warns that factors like rising prices, labor costs, and interest rates might still negatively impact corporate earnings. They predict that bankruptcy numbers might continue to fluctuate but generally trend upwards.

Total liabilities from bankruptcies fell to ¥101.3 billion, marking a 6.4% decrease from the previous year and the first drop in two months. Most affected were small companies and micro businesses, which dominated the bankruptcy statistics.

In August, over 70% of bankruptcy cases involved liabilities of less than ¥100 million. The service sector saw the highest number of bankruptcies, particularly among food and beverage establishments, with 242 cases reported.

The construction industry experienced a significant reduction in bankruptcies, down 22.9% to 121 cases. Meanwhile, decreases were also seen in the manufacturing, real estate, and transport sectors.

Bankruptcies due to inability to offset rising costs decreased by about 20% to 46 cases, which is the second-lowest monthly figure this year. However, the total for January through August was up 16.6% year-on-year to 490 cases. #

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