Business Failures Increase for Fourth Consecutive ⁢Year

The number of corporate bankruptcies in Japan involving liabilities of ¥10 million or more increased to the highest level in 12 years during the April-September period, according to Tokyo Shoko Research. A total of 5,172 businesses failed in the first half of fiscal 2025 (April-september),a 1.5% rise year-over-year, marking the fourth consecutive year of increases.

This figure is close to the 5,505 recorded in the same period of ⁢fiscal 2013. However, total liabilities associated with these bankruptcies plummeted 49.6% to ¥692,772 million, following⁢ a period⁢ that included a large-scale bankruptcy in the first half ⁣of fiscal 2024.

Labor Shortages a Major Contributing⁢ Factor

A meaningful driver of these failures is the growing ⁣issue of labor shortages. As many as 202 bankruptcies – a 33.7% increase – were attributed to manpower⁣ shortages caused by‍ rising labor costs and unfavorable working conditions,the highest number for⁣ a fiscal first half since comparable data⁤ became available in fiscal⁤ 2013. Tokyo Shoko Research noted that companies struggled to compete for‍ employees,⁤ often unable to match the wages or benefits offered by ⁣other⁤ firms.

Rising Prices and Sector-Specific Impacts

Bankruptcies ⁢linked to soaring prices also increased, rising 3.9% to 369 cases. The services sector, including restaurants and hotels, experienced a 4.0% climb in failures, totaling 1,762. The construction industry also faced difficulties, with a 7.4% increase to 1,036⁢ bankruptcies, largely due ⁣to⁢ substantially higher materials prices impacting cash‍ flow.

September Data Shows Continued Trend

In September alone, corporate bankruptcies rose 8.1% year-over-year to 873, while total liabilities fell 15.2%⁤ to ¥112,470 ‍million. this data reinforces the ongoing trend of increasing business failures ‍in Japan,coupled ‍with a decrease in the overall value of liabilities associated with those ⁤failures.