A general view shows the Shibuya district during sunset in Tokyo on August 28, 2023. (PHOTO / AFP)

TOKYO - Japan faced a significant rise in business bankruptcies as economic challenges persisted in August, reporting a year-on-year increase for the 16th consecutive month, according to a recent survey by a credit research company.

The number of business bankruptcies in August reached 742 cases, representing a staggering 50.5 percent increase compared to the same month last year, Japan's Teikoku Databank said in its latest online report.

Separate data released by Tokyo Shoko Research Ltd showed that during the January-August period, bankruptcies of ramen noodle shops in Japan soared 3.5 times compared to the same period last year, the highest pace in a year due to soaring food prices and utility costs

This marks the third-highest increase since the year 2000, surpassing the duration of the increase seen during and after the 2008 global financial crisis, said the report.

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By industry, six out of seven sectors experienced an increase in bankruptcies compared to the previous year. The hardest-hit services industry reported 187 bankruptcies in August, a 40.6-percent rise from the previous year. The August figure of business failures in the catering sector, in particular, has already surpassed the total number of bankruptcies recorded for the entire year of 2022.

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

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Despite the surge in bankruptcies, total liabilities decreased 6 percent year on year to 99.51 billion yen ($677.73 million) in August, the report showed.

Separate data released by Tokyo Shoko Research Ltd showed Tuesday that during the January-August period, bankruptcies of ramen noodle shops in Japan soared 3.5 times compared to the same period last year, the highest pace in a year due to soaring food prices and utility costs.