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The number of business bankruptcies in Japan rose above 1,000 in May

The number of corporate bankruptcies in Japan rose 42.9% from a year earlier to 1,009 in May, credit research agency Tokyo Shoko Research said on Monday.

The monthly number exceeded 1,000 for the first time since July 2013, when it reflected the impact of the end of small business financing measures introduced after the 2008 global financial crisis.

The latest result came as many companies faced rising prices and labor shortages, especially in the service sector.

The data referred to bankruptcies with debts of ¥10 million or more.

Total debts of bankrupt companies fell 50.9% to ¥136,769 million, after the figure was pushed up by the collapse of a major company a year earlier.

The number of bankruptcies due to rising prices rose by 47.4% to 87, especially in the manufacturing and transport sectors, which have many subcontractors. Many small businesses find it difficult to pass on higher costs in prices.

The number of bankruptcies among companies that took advantage of an interest-free and collateral-free lending program introduced during the COVID-19 pandemic continued to rise, rising by 15.5% to 67 cases.

By sector, the monthly number of bankruptcies in the service sector reached a record high of 327. The number of bankruptcies rose mainly among restaurant operators due to a labor shortage and rising labor costs.

The number of bankruptcies increased in all nine regions for the first time in nine months.

Tokyo Shoko Research warned that inflation-related bankruptcies are likely to rise further as many companies are unable to fully pass on higher costs to prices due to the yen’s weakness against the dollar.

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