Japan Economy, Housing & Lumber Shipments
After the surge leading up to the consumption tax increase of 5% to 8% on April 1st, Japan’s GDP contracted at an annualized 6.8% in the April to June quarter. The second quarter contraction was led by weakness in consumption and industrial production. Household consumption fell 19.2% compared to the previous quarter. The consumption tax increase and weakening yen are contributing to rising prices. In June, consumer prices jumped 5.1%, but average wages failed to keep pace.
With overall inflation tracking close to 1.5%, the Bank of Japan appears to be on track in achieving their goal of 2% inflation by fiscal 2015 by doubling the money supply. Whether a corollary or intended consequence, Japan’s currency is now touching new lows for the year at the 105yen to the dollar. With increasing the increasing costs of imports, stagnant wages and rising taxes, the purse strings of Japanese consumers are under pressure.
While economists expect Japan to recover and grow at an annualized 2.9% in the third quarter, criticism is mounting that the promised structural reforms touted under Abenomics are failing to materialize and that Japan’s recovery is in jeopardy.
Japan Housing Starts Summary
For the 5th consecutive monthly decline, Japan’s total housing starts fell 14.1% to 72,880 units. Pointing to significant weakness in consumer spending, owner occupied housing fell 25.3%. Rental housing fared comparatively better with a 7.7% decline. The mansion condominium market fell 12.7%.
Overall wooden housing fell 12.7% to 40,631 units. Platform frame starts fell 10.4% to 8,908 units. By segment the results for platform frame starts were as follows: owner occupied housing declined 24.6% to 2,612 units; built for sale spec homes retreated 16.8% to 1,143 units and rentals increased 1.1% to 5,144 units.
Softwood Exports to Japan
Total January to June Canadian softwood exports to Japan totaled 1,099,599m3, a decline of 18% over year prior results. The value of Canadian softwood exports over the same period declined 5.5% to $381.7 million. By species, SPF exports declined by 23% to 720,647m3 whereas Hem Fir (N) exports totaled 166,834m3 or off 9% with year prior results.