Japan Economy , Construction & Lumber Shipments
Economy: How are Abenomics Working?
So far, so good. Since the Abe LDP government returned to power this past December the Japanese economy has been experiencing increased GDP growth, falling unemployment and a surge in equities. Despite a 7% selloff on May 23rd, Japan’s Nikkei Index jumped from the 9,500 level in December to the 14,000 level at the end of May. Real annualized GDP for the first three months of 2013 posted a 3.5% gain. GDP growth for all of fiscal 2013 is forecast at 2.5%. In May, the Bank of Japan raised the economic outlook to “started picking up” from the previous assessment of “stopped decreasing”. March unemployment fell to 4.1% from 4.3% in February.
There are also signs that Prime Minister Abe’s key objective of re-inflating the Japanese economy is starting to work. Aggressive BOJ monetary policy has resulted in a 20% devaluation of the yen since this past December. The increasing costs of food and energy imports are beginning to play out in the market. Japan’s largest utilities are increasing electricity and gas rates to consumers for the third consecutive month in June – with more increases “in the pipeline”. Encouragingly, land prices are also on the rise. A recent MLIT survey of nationwide land values revealed that 80 of 150 commercial and residential sites experienced price increases in the first three months of this year – the strongest reading in five years.
Housing Starts Summary
Total March Japan housing starts increased 7.3% to 71,456 units. Owner occupied housing starts posted an 11.4% jump for a seventh consecutive monthly gain. The mansion condominium market countered this trend with an 8.3% decrease.
Total wooden starts jumped 11.3% to finish at 39,637 units. Of these, post and beam starts advanced 8.5% to 29,099 units. Pre-fab starts gained 12% to 9,520 units and wooden pre-fab advanced 6.9% to 1,145 units. Platform frame starts jumped 21.8% to 9,389 units. Among 2×4 starts owner occupied custom homes gained 12.5% to 2,568 units; rentals spiked 31.7% to 5,525 units and spec homes increased 7.6% to 1,286 units.
Japan SPF Exports Update
In the first three months of 2013, SPF exports to Japan increased 9.9% to 194 million fbm compared to 176.5 million in the preceding year. Rising volumes have also met with rising prices as the export value of SPF to Japan increased 27.8% to CAD $108.9 million in the first quarter of 2013. It’s nice to see that Canadian exporters are also doing their part to help Prime Minster Abe re-inflate the Japanese economy!