Japan Economy, Housing Starts & Lumber Shipments
Japan Economic Update:
Japan edged its way out of recession as annualized GDP rose to 1.0% in the three months ending in September, following a contraction of 0.5% in the previous quarter. The increase was attributable to an 11% rise in capital spending. The Bank of Japan is maintaining the current rate of quantitative easing as BOJ Governor Kuroda expressed confidence that the economy is along a recovery path. Economists have commented however that it is likely that the LDP cabinet will table a further fiscal stimulus package late this year.
Meanwhile the LDP cabinet has been busy negotiating details of the next consumption tax increase in April 2017 with National Diet coalition member Komeito. The legislators are aiming to soften the impact of the tax increase to low income families by exempting certain food staple products from the 8% to 10% hike. Next year will also see changes on the corporate tax front. Beginning in fiscal 2016 corporate taxes will drop from 32.11 to 29.97% as the Japanese government aims for Japan to become more tax competitive globally.
Japan Housing Starts Summary for September 2015
September total housing starts improved 2.6% increase to finish at 77,872 units. Owner occupied single family housing increased 2.4% and rental housing rose 13.3%. The mansion condominium market dropped 22.4% for the second consecutive monthly double digit decrease. Recently the Japanese condominium market has been suffering partly due to a deepening scandal relating to defective concrete pile work in large scale buildings. Mercifully, the impact of this scandal has not materially impacted wooden housing.
Total wooden housing increased 5.1% to finish at 45,178 units. Post and beam starts were up 7.0% to 33,384 units. Wooden pre-fab starts slipped 14% to 1,200 units. Platform frame starts increased 2.2% to finish at 10,594 units; with custom ordered single family homes increasing 4.8% to 2,899 units; rentals up 3.4% to 6,588 units and built for sale 2×4 spec housing down 12.2% to 1,076 units.
B.C. Softwood Exports to Japan
The results for B.C. softwood lumber shipments to Japan year to date through until the end of October were as follows: total shipments were 1,799,909m3, a decrease of 0.5% over year prior results; SPF shipments totaled 1,239,279m3, a 2.4% increase; Hem Fir shipments were 249,097m3 (9.0%) and Douglas Fir totaled 199,852m3, a 5.4% increase. The total value of shipments YTD through October totaled $621.5 million compared to $617.7 million in 2014.
Tokyo 2020 Olympic Stadium in Wood?
The selection for the National Stadium design for the Tokyo 2020 Olympics has been plagued by controversy. The initially approved proposal had an over the top futuristic design developed by British based Iraqi architect Zaha Hadid. This grandiose design fit in poorly with the surrounding neighborhood and ballooned to double the original budget of 130 billion yen. Prime Minister Abe then ordered the Japan Sports Council to shelve this plan and reopen a call for proposals for alternative designs.
It is now reported that two alternative designs have been submitted and both highlight wood in their construction. While the proposal proponents remain confidential, the initial responses to both proposals are positive due the selection of wooden materials, designs that fit better with the surrounding environment and are forecast to come below the 155 billion yen budget. One of the designs features extensive use of 72 massive wood pillars. The Japan Sports Council has yet to arrive upon a decision as to which design or general contractor company to award the project to. Canada Wood will monitor for opportunities for project involvement.