Japan Economy, Housing Starts & Lumber Shipments
Japan Economic Update
Japan’s economy continues to soldier on with modest growth. The IMF forecasts GDP growth of 0.8% for 2016. Despite some bright spots in infrastructure investment, construction and tourism, corporate and consumer spending remain sluggish. The Cabinet Office reported that machinery orders fell 5.1% in November. Wholesale prices continued to decline, falling 5.1% in 2016 thanks in part to lower energy import costs. The Bank of Japan continues to defer its 2% inflation target – now kicking the can a total of 5 times down the road to 2018.
Like the many other nations, Japan is currently focused on assessing the changing geo-political and economic implications of the new Trump Administration. Although Japan’s parliament recently passed the TPP agreement and Prime Minister Abe enthusiastically toured signatory nations to encourage the deal forward, one of President Trump’s first orders of business was to kill the agreement. Although the new U.S. administration re-affirmed commitments on national security, the emerging trade picture is murky at best. Meanwhile, corporate Japan is beginning to embrace President Trump’s demands to redirect FDI out of Mexico and into the U.S. Toyota recently announced plans to invest $10 billion into the United States over the next 5 years. From political circles to corporate boardrooms there is a sense of shared widespread unease at what “America First” means for Japan.
October Housing Starts Summary
Housing starts posted a solid 13.7% increase in October to finish at 87,707 units. Rental housing led the gains with a 22.0% increase compared to 4.9% increase in single family owner occupied housing. The mansion condominium posted a 9% increase.
Total wooden housing impressed with a 15.9% gain to 50,929 units. Of these, post and beam starts raised the bar with a 17.8% increase to 37,936 units. Pre-fab wood starts were up 10.8% to 1,212 units. Total pre-fab starts increased 10.3% to 12,958 units. Two by four starts increased 10.5% to 11,781 units. Two by four starts broke down as follows: custom ordered single family units declined 3.6% to 2,853 units; rentals surged 17.4% to 7,681 units and built for sale speculative housing increased 8% to 1,228 units.
November Housing Starts Summary
November housing starts increased 6.7% to 85,051 units. Rental homes did the heavy lifting again with a 15.3% increase compared to single family owner occupied housing which advanced 2.7%. The mansion condominium market fell 6.9%.
Wooding housing continues to show a comparatively stronger performance. Total wooden starts for November were up 6.6% to 50,628 units. The market share for wooden starts moved up to near multi-decade high of 59%. This compares with an average for total wooden housing of 52.7% between 2006 and 2015 and under 50% in the preceding decades.
Post and beam housing increased 6.9% to 37,950 units. Pre-fab wooden starts fell 1.2% to 1,266 units, but total pre-fab increased 6.6% to 13,635 units. Platform frame construction gained 6.5% to 11,412 units. Two by four starts broke down as follows: custom ordered single family units declined 1.4% to 2,865 units; rentals gained 9.5% to 7,214 units and built for sale speculative housing increased 6.8% to 1,292 units.
BC Wood Exports Summary
As of the end of November British Columbia year to date softwood lumber exports to Japan totaled 1,966,127m3: a decrease of 4.8% compared to year prior figures. By value year to date exports totaled $660.8 million – a decrease of 4.9%. By species groups, SPF shipments dropped 0.8% to 1,433,303m3. In contrast between January and November Hemlock decreased 14% to 241,069m3, Douglas Fir fell 11.6% to 192,593m3 and Yellow Cedar fell 21.2% to 459,501m3.