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Forest Industry Performance: May 2016

Forest Industry Performance: May 2016

Forest industry performance in April and May was reported by both the US government and the Institute for Supply Management.

Total industrial production (IP) increased 0.7 percent in April (Table 3) after a downwardly revised -0.9 percent during March (originally -0.6 percent). April’s advance was the largest since November 2014, but only the second gain in the last eight months. Utilities, which jumped 5.8 percent in April as demand for electricity and natural gas normalized, were responsible for much of total IP’s MoM increase. However, manufacturing output also contributed when rising by 0.3 percent (including Wood Products: +0.6 percent) after declining by the same amount in March.

The Institute for Supply Management’s (ISM) surveys showed that U.S. manufacturing expanded slightly faster in May (Figure 2). The PMI rose by 0.5 percentage point, to 51.3 percent. (50 percent is the breakpoint between contraction and expansion.) Another substantial jump in input prices appears to have been the main driver behind the PMI increase (Table 4); otherwise, except for slow deliveries, sub-index values either remained at/below breakeven or were unchanged/lower than in April. Meanwhile, the pace of growth in the non-manufacturing sector decelerated in May. The NMI dropped 2.8 percentage points (to 52.9 percent). Wood Products and Paper Products both expanded, thanks to new orders, production, employment and exports.

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The consumer price index (CPI) increased 0.4 percent in April—the biggest jump since February 2013—thanks to broad-based support dominated by the gasoline index (+8.1 percent). The all-items index has risen 1.1 percent over the last 12 months, and 2.1 percent for all items less food and energy. Particularly with gasoline’s MoM rise, the YoY decline in the energy index is rapidly diminishing. Rents were 3.7 percent higher YoY in April, and medical care was 3.1 percent higher.

The producer price index (PPI) rose 0.2 percent (0.0 percent YoY) in April. Rising prices for carbon steel scrap (+22.1 percent) were highlighted as contributing to the PPI’s MoM increase; we suspect expectations of hefty duties being levied on imported steel were behind the price rise. Other not seasonally adjusted indices for the forest products industry include:

  • Pulp, Paper & Allied Products was unchanged (-1.0 percent YoY)
  • Lumber & Wood Products: +0.5 percent (-1.0 percent YoY)
  • Softwood Lumber: +2.7 percent (+1.8 percent YoY)
  • Wood Fiber: -0.3 percent (-3.1 percent YoY)

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