Carrying on from the previous year, the global economy continued to experience a modest recovery in 2018. Unlike the simultaneous across-the-board worldwide improvement in 2017, however, there were signs of a discrepancy in the rates of recovery between countries and regions. While the global economy as a whole exhibited a modest ongoing positive turnaround from the second half of 2018 to the beginning of 2019, there were indications of weakness in various countries in Asia and Europe including China and Germany.
Despite a prolonged period of economic recovery from 2011 following the crisis set off by the collapse of Lehman Brothers, uncertainty surrounding the future continues to mount. This largely stems from the growing confusion caused by trade friction between the U.S. and China as well as concerns regarding the direction of the U.K.’s withdrawal from the European Union.
Turning to the domestic economy in fiscal 2018, Japan continued to experience a mild recovery after bottoming out in November 2012. Buoyed by a moderate pickup in the global economy, the corporate sector is reporting record-high earnings. Employment conditions and incomes are also on the rise. Moreover, domestic demand including private consumption and private-sector capital investment is showing signs of improvement while enjoying the benefits of an ongoing virtuous cycle.
As far as the market environments for each of the Group’s individual business segments are concerned, new housing starts in the domestic housing field increased for the first time in two fiscal years. While trends in rental housing remained weak in line with the previous year, growth in detached privately- owned homes helped drive up construction starts. In specific terms, construction starts came to 952,936 units in fiscal 2018, an increase of 0.7% compared with the previous fiscal year. Turning to detached houses, privately owned homes climbed 2.0% year on year to 287,710 units, while built-for-sale detached housing grew 5.1% compared with the previous fiscal year to 144,905 units.
In the Water Infrastructure field including polyvinyl chloride (PVC) pipes, shipments of high-value-added products that deliver increased labor efficiencies expanded on the back of robust trends in condominium construction starts. In addition, trends in construction investment remain stable spurred by a variety of factors including activities related to the upcoming 2020 Tokyo Olympic and Paralympic Games as well as urban redevelopment.
Overseas, business conditions became increasingly harsh. Smartphone demand in the Electronics field declined. Operations in the Automobiles and Transportation field were impacted by a deterioration in mainstay automobile market conditions in Europe and China. Turning to the Life Science field, which in relative terms is less affected by movements in economic conditions, emerging markets continued to experience growth. Demand in developed countries remained stable.
From a foreign currency exchange rate perspective, the value of the yen against the U.S. dollar hovered above the ¥109 level at the start of the fiscal year in April 2018 finishing just above ¥110.50 as of the end of the fiscal year in March 2019. Looking at movements throughout the fiscal year under review, the value of the yen exhibited a relatively moderate trend, fluctuating between a range of ¥108 to ¥113 against the U.S. dollar. In fiscal 2018, the annual average foreign currency exchange rate against the U.S. dollar was ¥111 and ¥128 against the euro. These levels were essentially unchanged from the previous year.