Japan Bankruptcies Rise, Signaling Jobless May Climb
Japan’s corporate bankruptcies rose for an 11th month in April as companies struggled to obtain funds, indicating unemployment may increase.
Bankruptcies climbed 9.4 percent from a year earlier to 1,329 cases, Tokyo Shoko Research Ltd. said in Tokyo today.
Bank of Japan Governor Masaaki Shirakawa said last week that funding conditions for companies remain “severe.” The jobless rate, which advanced at the fastest pace in four decades in March, will probably rise further as more companies go out of business, weighing on consumer spending and prolonging the recession.
“Companies, especially small ones, are still having trouble securing funds because of weak demand,” said Azusa Kato, an economist at BNP Paribas in Tokyo. “The major concern for increasing bankruptcies is higher unemployment, which could sap consumers’ ability to support the economy.”
Chuo Corp., a yarn maker, and Life Stage Co., a condominium developer, filed for bankruptcy last month, taking the number of publicly traded business failures to 16 this year. A record 33 companies went out of business in 2008.
“As profits worsened, we couldn’t escape from tight funding conditions” even after cutting jobs and wages, Chuo said in a statement.
Rising Unemployment
The companies that went out of business last month employed 11,537 workers faxless payday loan. Japan’s unemployment rate climbed to 4.8 percent in March from 4.4 percent in February, the biggest increase since 1967.
Prime Minister Taro Aso plans to spend 3 trillion yen ($32 billion) from his $15.4 trillion yen stimulus package unveiled last month on measures including financial support for small and midsized companies, which employ 70 percent of Japan’s workforce.
He also expanded the ceiling on an emergency credit program to 30 trillion yen from 20 trillion yen. Some 492,000 small and midsized companies have applied for 10.1 trillion yen of funds under the program as of May 8, according to the National Federation of Credit Guarantee Corporations.
The 9.4 percent increase in bankruptcies was the slowest in five months, in part because the program may be helping some companies stay afloat, said Nobuo Tomoda, manager of information and publications at Tokyo Shoko. Still, he added, demand is so weak that companies may struggle to cope with rising debt and bankruptcies are likely to keep climbing.
Pioneer Corp. is preparing to apply for public funds, company President Susumu Kotani said last month. The maker of car audio equipment and navigation systems is forecasting its sixth year of losses and plans to cut 9,800 jobs.