August bankruptcies up 4.2%, construction and real estate hit hard again

September 9, 2008
By Ken Worsley

According to Tokyo Shoko Research, the number of bankruptcies in Japan increased 4.2% in August against last year, to 1,203. The total value of debts left behind, however, fell 0.2% to about 867.98 billion yen.

Once again, the construction industry is leading the way, with 403 firms going bust in August. That number was followed by 244 firms filed for bankruptcy in the service industry.

While the total number of bankruptcies rose slightly, and the total value of debts left behind decreased, the number of affected workers rose 42.9% to 13,704. This is the highest figure seen yet this year, and seems to hint that more large firms are indeed going under. 42% of those employees affected by August bankruptcies were tied to the construction or real estate industries.

Speaking of real estate, the number of real estate firms going bankrupt in August increased by 23.5% to 42 firms. The total value of debt left behind by real estate firms, however, declined by about 25%, as last August saw some larger failures.

The question now: with bankruptcies at an all-time high (by value) in July, and hovering near that now, and more bankruptcies in sight, will the Financial Services Agency step in and tell banks to lend more, or will free market principles be allowed to govern?

Filed Under Bankruptcy, Business, Economic Reports