Sharp Increase in Business Failures in Japan During August

12 Sep, 2023

Sharp Increase in Business Failures in Japan During August

In August, Japan witnessed a significant surge in business bankruptcies, marking the 16th consecutive month of year-on-year increases, as per a recent survey conducted by a credit research firm. During this period, the number of business bankruptcies reached 742 cases, representing a striking 50.5% rise compared to the same month in the previous year, according to the latest online report by Japan's Teikoku Databank.

This increase is the third-highest recorded since the year 2000, surpassing the duration of the rise observed during and after the 2008 global financial crisis, as stated in the report. Among various industries, six out of seven sectors experienced a rise in bankruptcies compared to the previous year. The services industry was the hardest hit, reporting 187 bankruptcies in August, reflecting a 40.6% increase from the previous year. Notably, the catering sector's August figures for business failures have already exceeded the total number of bankruptcies recorded for the entire year of 2022.

The primary reasons attributed to these bankruptcies were economic downturns, with 575 cases categorized as recession-related. Some of the failures involved the selling off of assets to settle debts, reaching an unprecedented level of over 200 cases for three consecutive months, a first since 2000.

Despite the surge in bankruptcies, the report indicated that total liabilities decreased by 6% year on year, amounting to 99.51 billion yen (approximately 677.73 million U.S. dollars) in August. In separate data released by Tokyo Shoko Research Ltd., it was revealed that during the January-August period, the number of bankruptcies among ramen noodle shops in Japan increased 3.5 times compared to the same period the previous year. This surge was attributed to rising food prices and utility costs, marking the highest pace of increase in a year.