Japan Economy, Housing & Lumber Shipments
Japan Economic Update
On July 10th the LDP government obtained a full 2/3 majority in the Upper House elections. The LDP also maintains a majority in the Lower House and are now find themselves in an even more powerful position to push through their legislative agenda. While opposition parties remained disorganized, the LDP’s campaign focus on economic issues resonated well with voters. Japan’s economy is not in a recession; however, the Cabinet Office revised their growth forecast from 1.7% to 0.9% for 2016 and public concern over slow is widely shared.
Shortly after the election Prime Minister Shinzo Abe tapped Economic Revitalization Minister Ishihara to draft an ambitious new fiscal stimulus program. A 28 trillion yen (Nearly CAD $350 Billion) stimulus package was announced to jump start the economy. The details of the spending package are currently being compiled, but they are expected to include infrastructure spending, expanded social welfare spending and small business loans as well as an accelerated timeline to implement maglev railway line development. With tax revenues largely flat, the spending package is expected to be largely financed through the issuance of new bonds.
Towards the end of July, the Bank of Japan also confirmed an expansion of their asset purchase program to effectively double ETF fund purchases. Markets reacted negatively as more aggressive moves from the BOJ had been expected. The BOJ also indicated that they will be reviewing the impacts all monetary stimulus measures – including negative interest rates before their next meeting in September. Further monetary easing is expected at that time.
Japan Housing Starts Summary
Total housing starts posted the fifth consecutive monthly increase in May with a gain of 9.8% to 78,728 units. Owner occupied homes increased 4.3% and rental housing posted a robust 15% increase. Countering this trend, the mansion condominium market decreased 0.8%.
Total wooden housing increased 12.2% to 42,794 units. Post and beam starts posted another strong showing with a gain of 12.6% to 32,323 units. Wooden pre-fab starts put in another sclerotic performance with a drop of 9.7% to 1,059 units. Platform frame starts increased 13.7% to 9,412 units; with custom ordered single family homes up 1.7% to 2,604 units, rentals up 19.0% to 5,722 units and built for sale 2×4 spec housing up 21.3% to 1,075 units.
BC Wood Exports Summary
As of the end of May, British Columbia year to date softwood lumber exports to Japan totaled 789,261m3, a decline of 9.3%. By value softwood lumber exports totaled $276,030 million or 7.8% lower than over the same period in 2015. By species SPF totaled 547,816m3, a decline of 8.6%; Hemlock 117,608m3, up 2.2%; Douglas Fir 80,366m3, down 17.6%; and Yellow Cedar 24,616m3, a decline of 29.2%.