Japan Economy, Housing & Lumber Shipments
Beyond the hype of the high yen leading to a hollowing out of corporate Japan, if 2011 corporate earnings are any indicator, Japanese companies are proving to be remarkably resilient. Despite the impacts of the Great Eastern Japan Earthquake, flooding to overseas operations in Thailand and a strengthening yen, most Japanese posted profit increases in fiscal 2011. According to a Nikkei survey of 800 non-financial institutions, 52% of listed companies registered profit increases, with 10% of those listing record profits.
Thanks to an improving auto sector, Toyota motored away with $4.4 billion in profits in 2011. The company is forecasting an 18% rise in sales for 2012. Japanese consumer products manufacturers such as Unicharm and retailers such as Uniqlo and Lawson’s benefitted from steady sales into emerging markets such as Indonesia and China. With unemployment hovering at an enviable 4.5%, Japanese consumers have also recently shown signs of life following the period of restraint after March 11th of last year. Clothing retailers, domestic tourism and restaurants are witnessing more robust sales in 2012. As a case in point, sales at popular family restaurant Denny’s were up 19% in March. Corporate Japan’s return to profitability was also attributed to increased cost cutting measures. Japan’s airlines in particular appear to have turned the corner with Japan Airlines emerging from bankruptcy protection to post 187 billion yen in profit and competitor ANA posting record earnings.
However, the news was not uniformly positive. Bucking the return towards profitability, electronics makers such as Sony and Panasonic, facing stiff competition from Korean manufacturers in flat screen TV’s and semi-conductors, posted deepening losses. And despite improved earnings in many corporations, the Nikkei 225 equities index fell beneath the 9,000 threshold in May on increasing fears of a widening European financial crisis.
Total housing starts posted gains for a second consecutive month in March. Total starts were up 5% to finish at 66,597 units. Wood frame starts edged up 0.5% to 35,612 units. Results varied by building method with 2×4 and wooden pre-fab outperforming post and beam. Condominium starts also continued to recover, posting a 20.4% increase. By region Greater Tokyo was up by 2.9%, the Osaka/Kansai region by 3.8% and “Other” regions of Japan by 10.3%. In the earthquake / tsunami affected regions, year over year increases were as follows: Iwate 17.8%; Miyagi 77.7%; Fukushima 21.3%.
By building method, post and beam starts declined 1.3% to finish at 26,827 units. Pre-fab wooden housing starts increased 9.4% to 1,075 units whereas overall pre-fab starts increased 7.3% to 8,497 units. Two by four housing increased 6.2% to 7,710 units. Single family starts powered the increase. Rental units declined 1.8% to 4,196 units. Owner occupied custom housing jumped 10.2% to 2,283 units and single family spec housing was up 30.5% to 1,195 units.
March SPF exports to Japan increased 7.1% to 140,502 cubic meters. Hemlock exports for March jumped 17% to 49,453 m3 and total Canadian softwood exports increased 8.8% to 230,055m3. By value, SPF March exports increase 4% to $23,381,000. Year to date SPF exports increased 7.25% to 369,927m3. Overall first quarter softwood lumber exports totaled 572,164m3 – up 2.0% over year prior results.