The number of corporate bankruptcies in Japan surged 42.9% from a year earlier to 1,009 in May, credit research firm Tokyo Shoko Research said on Monday, the Japan Times reported. The monthly number exceeded 1,000 for the first time since July 2013, when it reflected the impact of the end of funding support measures for small businesses introduced after the 2008 global financial crisis. The latest result came as many companies struggle with rising prices, as well as labor shortages mainly in the service sector.

Japan's government will highlight the need to work closely with the central bank and guide policy "flexibly" in the wake of soft consumption and uncertainty over the inflation outlook, a draft of its annual economic blueprint seen by Reuters showed. "Monetary policy has entered a new stage," which required the government and the Bank of Japan to "continue working closely and guide policy flexibly in accordance to economic and price developments," according to the draft.

Bank of Japan policy board member Toyoaki Nakamura said Thursday that he is still not fully confident that wages and inflation will keep growing, adding that it is appropriate for the bank to maintain its current monetary policy for the time being, the Wall Street Journal reported. “I am not confident about the sustainability of wage increases,” Nakamura said in a speech to business leaders in the northern prefecture of Hokkaido.

Bank of Japan Deputy Governor Ryozo Himino said the central bank must be "very vigilant" to the impact the yen's moves could have on the economy, suggesting the currency's weakness will be among factors affecting the timing of its next interest rate hike, Bloomberg News reported. However, he said that it was inappropriate for central banks to directly target exchange rates in setting monetary policy, as other factors needed to be considered as well. "Exchange-rate fluctuations affect economic activity in various ways.

Japanese companies trimmed capital investment in the first quarter, a result that likely indicates revised data due next week will continue to show the economy contracted in the period, Bloomberg News reported. Capital expenditures on goods excluding software fell 0.5% in the three months through March from the previous quarter following a surge in spending at the end of last year, the finance ministry reported Monday. Manufacturers led the decline, cutting spending by 3% from the prior quarter, while service-sector firms boosted spending a tad.

The Bank of Japan will need to proceed carefully with any further policy changes, policy board member Seiji Adachi said, stressing that the central bank’s decision to end easing measures wasn’t a shift toward monetary tightening, the Wall Street Journal reported. “We need to absolutely avoid premature rate increases, which could throw cold water on a chance for the Japanese economy to recover,” Adachi said in a speech on Wednesday.

Japan’s consumer inflation grew at a slower pace in April, but remained above the Bank of Japan’s 2% target amid growing expectations over additional interest-rate increases, the Wall Street Journal reported. Overall consumer prices rose 2.5% from a year earlier in April, compared with the 2.7% increase in March, government data showed Friday. While the rise in food prices excluding fresh food slowed down in April, the end of the government’s utility subsidies is expected to push up consumer prices starting May.

The Japanese economy contracted in the first quarter of 2024, extending a rough patch and signaling that inflation fueled by a weak yen is hurting consumer demand, the Wall Street Journal reported. The economy’s overall performance contrasts with robust earnings reported recently by top Japanese exporters such as Toyota Motor and the stock market’s rise over the past year. The fall in the yen, which recently traded at a 34-year low against the dollar, helps exporters’ competitiveness and tends to lift their profits.

Any future foreign-exchange intervention by Japan to support the yen would likely involve tapping its holdings of US Treasuries, according to Bank of America Corp., Bloomberg News reported. Japanese authorities likely stepped in on two occasions in recent weeks to bolster the yen as it reached the weakest levels in several decades versus the dollar, and they probably used their cash reserves to accomplish that.

Japan’s households cut spending again in March as sticky inflation weighed on sentiment and government subsidies capped costs for utilities, although policymakers are looking for historic wage hikes to be a catalyst for a recovery in coming months, the Japan Times reported. Real outlays decreased 1.2% from a year before, falling for the 13th consecutive month, the ministry of internal affairs reported Friday. The result compared with economists’ forecast of a 2.3% drop.