Forest Industry Performance: April 2016

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

Total industrial production (IP) fell 0.6 percent for a second month in March (Table 3), the sixth decline in the past seven months. For 1Q2016 as a whole, IP fell at an annual rate of 2.2 percent. Continued pullbacks in mining and utilities were responsible for a substantial portion of the overall March decrease, but manufacturing, Wood Products and Paper also retreated.

The Institute for Supply Management’s (ISM) surveys showed that U.S. manufacturing’s pace of expansion slowed slightly during April (Figure 2). The PMI dropped 1.0 percentage point, to 50.8 percent. (50 percent is the breakpoint between contraction and expansion.) The most noticeable change in the PMI data involved a jump in input prices. Otherwise, except for exports and imports, sub-index values either remained in contraction or were lower than in March (Table 4).

On a more positive note, the pace of growth in the non-manufacturing sector accelerated. The NMI rose 1.2 percentage points, to 55.7 percent. Key sub-indexes were mixed, with new orders and input prices exhibiting the largest increases. “Market is starting to pick up as expected,” a Wood Products respondent wrote. “Severe non-skilled labor shortage is hurting the construction industry,” observed one Construction respondent.

The consumer price index (CPI) increased 0.1 percent in March, thanks primarily to rising prices for energy and non-food items. The index for all items less food and energy has risen 2.2 percent over the last 12 months. Despite the March rise, the energy index was 12.6 percent lower YoY.

Consumer price changes are likely to remain fairly muted in the short run, as the producer price index (PPI) edged down 0.1 percent (and -0.1 percent YoY) in March despite a 7.1 percent MoM jump in the gasoline index. Other not seasonally adjusted indices for the forest products industry include:

• Pulp, Paper & Allied Products fell 0.1 percent (-1.1 percent YoY)
• Lumber & Wood Products: +0.3 percent (-1.5 percent YoY)
• Softwood Lumber: +2.8 percent (-1.6 percent YoY)
• Wood Fiber: -0.2 percent (-3.0 percent YoY)