Japan's ageing, labour-starved construction industry gives economy a capex boost

TOKYO: As Japan's construction firms are squeezed by the tightest labour market since the 1970s and a rapidly ageing population, they are pouring investment into technology - and providing unexpected support to an economy reeling from the bitter US-China trade war.

Equipped with state-of-the-art AI, cameras and sensors, the machines handle everything from transporting building materials and welding steel to installing ceilings. Capital expenditure in the sector rose 7.7 per cent in the April-June quarter - far above the 1.9 per cent gain for all industries - after a 15.3 per cent jump in the previous quarter, government data showed.Construction firms plan to boost research and development spending by 15.5 per cent in the fiscal year ending in March 2020, faster than the previous year's 13.8 per cent gain and 7.7 per cent rise in the year before that.

"Construction projects need a long time to complete. That means once investment starts, the impact lasts for a long time," said Hiroshi Miyazaki, senior economist at Mitsubishi UFJ Morgan Stanley Securities. There were 5.1 million construction workers in Japan as of end-August, a 27 per cent decline from 20 years ago.

In the past, that involved stopping train operations on weekends and intense training for workers on the project.

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