While domestic housing markets are improving, international markets continue to be an important part of many companies' sales portfolios. International markets can help companies minimize losses when domestic markets decline. Recent growth in international markets far surpassed domestic consumption and sales. While some markets have softened, they still offer major sales opportunities.
During the first quarter of 2013, China's economy registered 7.7% GDP growth year on year. While still impressive compared to other world economies, it was a decline from the projected 8%. Slower investment in construction, the result of restrictions and taxes and fees to curb speculative investment, was a major factor blamed for the decline. The central government has begun to ease these impediments to help improve consumption, particularly in rural areas.
During first quarter 2013, Japan's economy grew at an annual rate of 4.1%. It was lifted by strong household spending and increased activity in the housing market where developers are keen to break ground before an increase in Japan's consumption tax, scheduled for next April.
At the same time, the yen has weakened to between 85 and 100 against the dollar in recent weeks, paving the way forJapan to emerge from an unprecedented and largely uninterrupted five year stretch where the currency's appreciation beyond that level hindered Japanese exporters and their ability to sell products overseas.
Japanese Construction companies broke ground on 14.5% more homes last month from a year earlier, according to a report released by the Ministry of Land, Infrastructure, Transport and Tourism in Tokyo. Housing starts were expected to rise 6.1 percent, based on the median estimate of 24 economists in a Bloomberg News survey.
An unprecedented monetary easing under Bank of Japan Governor and increased government spending under Prime Minister Shinzo Abe's leadership have helped bolster consumer confidence. About 35 percent of 2,478 people surveyed in April by Haseko Corp. (1808), a condominium builder, said now is the time to buy a house, an increase from 30 percent in January.
In 2012, housing starts exceeded analysts' expectations, increasing for nine months in a row. By May 2013, housing starts reached an annualized 1.027 million units, matching October 2008 levels. Consumers have been rushing to purchase homes before the government enacts an increase in the consumption tax to 8% by April and to 10% by October 2015. New household formation, consumer confidence and rebuilding from the Tohoku earthquake also stimulated construction.
According to the Center for International Trade in Forest Products (CINTRAFOR), While macro-level economic changes pose some challenges for US exporters, wood products exports are projected to register significant gains over 2012.