Japan Economy, Construction and Lumber Shipments
Japan Economic Update
Following the United Kingdom’s surprise Brexit vote results, the Japanese yen has continued to strengthen dramatically as international investors hedge their bets in yen as a safe haven currency. Over the last 6 months the Japanese yen has appreciated from the 123/USD level to parity in August. This rapid appreciation, along with weak energy prices, is resulting in deflationary pressures and is thereby frustrating the attempts of Bank of Japan Governor Kuroda to achieve a 2% annual inflation target. In July wholesale prices declined 3.9% as a result.
The rising yen is also hampering exports and growth. Exports fell 14% in July. In the April to June quarter GDP grew at an anemic 0.2% annualized rate, as consumption and capital investment remain sluggish. While unemployment has fallen to 3.1%, the lowest level in 25 years, consumer confidence remains weak.
Japan Housing Starts Summary
In June total housing starts declined 2.5% to 85,953 units for the first monthly fall in 6 months. While single family owner occupied and rental units increased 1.1% and 3.7% respectively, the mansion condominium market fell 28.1%.
Total wooden housing increased 2.9% to 47,502 units. Post and beam starts improved 5.0% to 35,739 units. Wooden pre-fab starts fell 10.7% to 1,234 units. Platform frame starts declined 1.8% to 10,529 units; with custom ordered single family homes down 1.1% to 3,017 units, rentals down 1.9% to 6,263 units and built for sale 2×4 spec housing off 0.2% to 1,237 units.
BC Wood Exports Summary
As of the end of June, British Columbia year to date softwood lumber exports to Japan totaled 984,671m3, a decline of 4.2%. Between January and June SPF Shipments trailed 2.6% to 688,081m3; Hemlock increased 1% to 141,395m3, Douglas Fir fell 15.3% to 101,185m3 and Yellow Cedar fell 24.1% to 32,411m3. By total value, BC Softwood shipments fell 3.8% to $341.6 million. Although softwood shipments trailed year prior results between January and May, volume shipments recovered in June with a 19.1% increase to 195,410m3.