With economic conditions showing little variation, the forest products industry finds itself at a crucial juncture due to global conflicts and ongoing inflation. How does this industry navigate through these challenging factors?
After revisions reducing September’s +0.4% to +0.2%, total industrial production (IP) declined 0.6% in October, a -0.7% decrease year-over-year (YoY). Manufacturing output also fell 0.7%, the eighth straight month of declines.
Much of October’s retreat was due to a 10% drop in the output of motor vehicles and parts resulting from strikes at several major vehicle manufacturers. Excluding motor vehicles and parts, the index for manufacturing edged up 0.1%.
The index for utilities decreased 1.6%, and the output of mines increased 0.4%. New factory orders fell 3.6%, led by durable goods (-5.4%)— especially commercial planes, which tumbled 50% after soaring 91% in September.
Nondurable goods orders decreased (-1.9%) and business investment spending tiptoed lower (-0.3% MoM).
The Institute for Supply Management’s (ISM) monthly sentiment survey of US manufacturers reflected no change to the rate of contraction in the sector during November.
The PMI registered 46.7%, representing the 13th month in contraction (50% is the breakpoint between contraction and expansion). Only the customer-inventories index remained above 50.
Paper products led the list of industries reporting a downturn. Concurrent activity in the services sector accelerated (+0.9PP to 52.7%). ISM’s estimates of current GDP range from -0.7% (manufacturing) to +1.0% (services).
After increasing 0.4% in September, the consumer price index (CPI) was essentially unchanged in October (+3.2% YoY) because a continued rise in the shelter index offset a retreat in the gasoline index. The energy index fell 2.5% MoM as a 5.0% decline in the gasoline index more than offset increases in other energy component indexes. The food index increased 0.3% in October after rising 0.2% in September.
Meanwhile, the producer price index (PPI) fell 0.5% (+0.1% expected) after advancing 0.4% in September. October’s MoM decline was the largest decrease since April 2020’s -1.2%.
On a YoY basis, October’s final demand index rose 1.3%. The index for final demand goods fell 1.4% MoM, primarily attributable to a 15.3% drop in prices for gasoline. Prices for final-demand services were unchanged on the net.
In the forest products sector, price indexes were at the following numbers:
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