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US Forest Industry Performance: April 2018

US Forest Industry Performance: April 2018

US forest industry performance in March and April was recently reported by both the US government and the Institute for Supply Management.Following a 1.0 percent increase in February, total industrial production (IP) rose 0.5 percent in March (+4.3 percent YoY)—mainly on a 3 percent jump in utilities and a 1% step up in mining; the total index advanced at an annualized 4.5 percent rate during 1Q. After having climbed 1.5 percent in February, manufacturing output edged up 0.1 percent in March.

New orders increased by 1.6 percent (+7.3 percent YoY) in March. Excluding transportation, new orders rose by a more sedate +0.3 percent MoM (+5.8 percent YoY). Business investment spending disappointed with a 0.4 percent MoM drop (+5.3 percent YoY).

 ISM_May_2018

 

The Institute for Supply Management’s (ISM) monthly sentiment survey showed the expansion in U.S. manufacturing noticeably decelerating in April. The PMI registered 57.3 percent, down 2.0PP from the March reading. “The increase in prices across all industry sectors continues,” noted ISM’s Timothy Fiore, including “metals… corrugate, wood, wood products and plastics.” Indeed, the prices-paid sub-index is at its highest level since April 2011; 61.2 percent of respondents reported paying higher prices, and only 2.6 percent lower prices.

The pace of growth in the non-manufacturing sector also slowed by 2.0PP, to 56.8 percent. Price increases were somewhat less widely dispersed in the service sector: 33 percent reported higher prices; 4 percent lower prices.

All of the industries we track expanded in April. Construction and tariffs were common topics among the comments. “The trade tensions are impacting purchasing of steel and are causing suppliers to send letters of concern regarding contracted purchases for this year and the future based on these proposed tariffs,” observed one Construction respondent.

By contrast, the producer price index (PPI) advanced 0.3 percent in March (+3.0 percent YoY). Roughly 70 percent of the increase was attributable to a broad-based 0.3 percent advance in prices for final-demand services—led by the outpatient-care index (+0.4 percent). The index for final-demand goods also climbed 0.3 percent, as a 3.7 percent drop in the gasoline index blunted a 31.5 percent jump in prices for fresh and dried vegetables.

Forest products sector performance included:

  • Pulp, Paper & Allied Products: +0.1 percent (+1.6 percent YoY)
  • Lumber & Wood Products: +1.1 percent (+7.2 percent YoY)
  • Softwood Lumber: +2.2 percent (+16.3 percent YoY)
  • Wood Fiber: +0.5 percent (+3.7 percent YoY)

 

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