Canada Wood Today | The Canada Wood Group

Japan Economy, Housing & Lumber Shipments

Shawn Lawlor

By Shawn Lawlor

Managing Director, Canada Wood Japan

May 2, 2012

Japan Economic Update

Starting on a positive note, the Ministry of Health and Welfare announced that 660,000 new graduates entered the work force in the new fiscal year starting in April. Employment levels in Japan remain comparatively robust with the unemployment rate stable at 4.5%. Consumer spending and capital investment also appear to be rising slightly.

One April development that threatens a serious setback to Japan’s game book for economic reform is the acquittal of DPJ heavyweight Ichiro Ozawa from a political funds scandal that has sidelined his leadership within the DPJ. Prior to the scandal Ozawa was a leading contender to become Prime Minister. Current DPJ Prime Minister Noda is pushing hard at fundamental economic reform, advocating a rise in the consumption tax to 10% to shore up public finances as well as Japan’s entry into the TPP and bilateral trade negotiations. Ozawa and his 100+ old school Diet Member supporters remain opposed to trade liberalization and the consumption tax hike. With a vote on the consumption tax scheduled for June, there is now a significant threat of the stalemate and potential leadership challenge in the Diet.

While the Diet continues to attempt to get its fiscal house in order, the Bank of Japan expanded quantitative easing: announcing a U.S. $61.7 billion asset purchase program expansion on April 27th. As the B.O.J. ramps up the printing press to purchase Japanese Government Bonds in hopes of achieving an end to deflation, the bank’s moves are not going unnoticed by hedge fund managers. Some financial pundits have recently commented that Japan could be the next country to face a Southern European styled debt crisis, pointing to a steady climb in credit default swaps to insure JGB’s. With Japanese financial institutions sitting on US $7.45 trillion in JGB holdings, Japan’s financial system holds a significant risk of unraveling should hedge fund managers spike an increase in long term JGB yields.   

Japan February Monthly Housing Starts Summary

Housing starts bucked the typical seasonal downturn, posting a 7.5% increase to finish at 66,928 starts. Total wooden starts increased 6.1% whereas the “mansion” condominium market surged 19.5%. It finally appears that reconstruction housing is beginning to show up in the Tohoku region with February starts in Miyagi and Iwate up 68.7% and 27% respectively. With ongoing “fallout” from the Daiichi Nuclear Plant, starts in Fukushima Prefecture decreased 0.2%.

Total 2×4 housing starts finished at 6,723 units: up 5.3 % from year prior levels. Custom built owner occupied homes increased 7.9% to 2,179 and speculative homes were up 2.1% to 1,212 units. Rental housing increased 4.7% to 3,329 units. On the post and beam side starts finished at 27,564 for a 5.7% increase. Pre-fab wooden housing starts increased a remarkable 18.3% to 1,278 units. Total pre-fab units increased 5.0% to 9,578 units.


SPF Shipments

February 2012 SPF Shipments to Japan totaled 57.2 million fbm, a 3.8% increase over year prior figures. SPF shipments in the first two months of 2012 totaled 111.5 million fbm or a 6.7% increase over year prior results.