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Report from
North America
US consumer sentiment reaches post-pandemic high
Consumer confidence is the strongest it has been in a year,
amid surging economic growth and strong job gains due to
record stimulus spending, low interest rates, and the
positive impact of vaccinations. The University of
Michigan¡±s Sentiment Index rose to its best level in a year
on the strength of recent gains in current economic
conditions, while future economic prospects remained
unchanged from March.
This is opposite of the usual pattern over the past 50 years,
when recoveries were paced by larger and earlier gains in
expectations. The strength in current economic conditions
reflects much larger than usual stimulus payments during
the past year, and much larger than usual economic gains
due to comparisons with last year¡±s shutdowns.
Other factors suppressed the pace of expected gains,
including persistent concerns with vaccine safety as well
as a surge in year-ahead inflation expectations to 3.7%, the
highest level in nearly a decade. Fortunately, this surge in
inflation expectations was still well-anchored by much
lower inflation expectations over the next five years
(2.7%). Perhaps more importantly, half of all consumers
expected declines in unemployment, the highest level ever
recorded.
US and Canada see surge in housing starts
US Housing starts surged 19.4% to a seasonally adjusted
annual rate of 1.739 million units in March, the highest
level since June 2006.
Starts soared 37% on a year-on-year basis in March.
Homebuilding slumped in February as large parts of the
country reeled from unseasonably cold weather, including
winter storms in Texas and other parts of the densely
populated South region.
Groundbreaking activity increased in the Northeast,
Midwest and South, but fell in the West. Permits for future
home building rose 2.7% to a rate of 1.766 million units
last month, recouping only a fraction of February¡±s 8.8%
plunge. They jumped 30.2% compared to March 2020.
The sharp rebound reported by the US Department of
Commerce added to robust retail sales in March in
suggesting that the economy was roaring after a brief
weather-related setback in February. Increasing COVID-
19 vaccinations, warmer weather and massive fiscal
stimulus are driving the economy, with growth this year
expected to be the strongest in nearly four decades.
However, soaring softwood lumber prices amid supply
constraints could limit builders¡± capacity to boost
production and ease a shortage of homes that is
threatening to slow housing market momentum.
Canadian housing starts jumped to the highest level in
more than four decades as developers seek to take
advantage of a hot real estate market.
Builders started work on an annualized 335,200 units last
month, a jump of 22% from February¡±s already elevated
levels, according to Canada Mortgage and Housing Corp.
That beats economist predictions for a 255,000 increase
and was the highest monthly total since at least 1977. The
gain was led by construction of multi-family dwellings
like condos.
See:
https://www.census.gov/construction/nrc/pdf/newresconst.pdf
Property shortage drags US existing home sales to
seven-month low
US existing home sales fell to a seven-month low in
March, pulled down by an acute shortage of properties,
which is boosting prices and making owning a house more
expensive for some first-time buyers.
Existing home sales dropped 3.7% to a seasonally adjusted
annual rate of 6.01 million units last month, the lowest
level since August 2020 according to the National
Association of Realtors. Sales fell in all four regions.
Existing home sales, which are counted at the closing of a
contract, lag signings by a month or two. That means part
of the drop in sales last month was due to harsh weather in
February. Home resales, which account for the bulk of US
home sales, increased 12.3% on a year-on-year basis,
remaining well above their pre-pandemic level.
The housing market is experiencing a dearth of properties
available for sale in the wake of strong demand for bigger
and more expensive accommodations as the COVID-19
pandemic forced millions of Americans to work from
home attend school remotely. Though homebuilders have
stepped up new home construction, they are grappling
with record-high lumber prices as well as shortages of land
and workers.
See:https://www.nar.realtor/newsroom/housing-market-reachesrecord-high-home-price-and-gains-in-march
Softwood lumber prices reach stratospheric heights
The construction industry in North America is reeling
from solid wood construction framing building material
prices that continue to soar. It is a frustrating situation for
sawmills as supply remains well below extremely hot,
indeed unabated, demand. If anything, it looks like the
home building and renovating season this year will be
busier even than last year. While there are builders and
contractors who are cancelling and delaying jobs, this
reversal is doing nothing to slow housing activity.
By all accounts sawmill order files are full now well into
May, while panel (plywood and OSB) mills are currently
quoting into August. Lumber market players don¡±t know
how to react as an impossible situation gets more
impossible with every passing day. According to sellers,
sales of Western Spruce-Pine-Fir (S-P-F) in the United
States ramped up for the week ending April 9. Prices
advanced again amid persistently scarce supply, with
buyers at all levels desperate to secure any stick of wood
they could get their hands on.
After reaching the seemingly unbelievable level of
US$1,060, in the week ending April 9, the wholesaler
price of benchmark softwood lumber commodity item
Western S-P-F KD 2¡Á4 #2&Btr was US$1,130 per
thousand board feet. This is up by $70, or 6%, from the
previous week. Compared to the price one-year-ago, that
week¡±s price is up by $820, or 265%.
See:
http://www.globalwood.org/market1/us_panels_20210421.htm
While sawnwood prices soar, logs are still cheap in the
US South
US softwood sawnwood prices have soared to records.
Demand for wood is skyrocketing. The shares of wood
suppliers are surging and yet, trees themselves are dirt
cheap in places like Louisiana, where timber supplies are
plentiful.
An abundance of harvest-ready trees has kept stumpage
fees extremely low across the US South, home to half of
the country¡±s production. Meanwhile, lumber futures are
up 85% in 2021 because of soaring demand and, as a
result sawmill profit margins are exploding. The spread
between futures and stumpage for Louisiana pine, for
example, has more than doubled just this year, topping
$1,100 per thousand board feet.
¡°As soon as the supply disruptions sort themselves out and
everything gets back to normal, we expect a major
correction in prices,¡± said Joshua Zaret, a senior analyst at
Bloomberg Intelligence. ¡°But right now, if you¡±re
producing lumber in the US South ¡ª or anywhere for that
matter, but particularly in the US South, where your log
cost hasn¡±t come up ¡ª it¡±s very profitable.¡±
See:https://www.reportdoor.com/lumber-prices-soar-but-logsare-still-dirt-cheap/
US manufacturing continues recovery
American manufacturers grew faster in March as a key
index hit a 38-year high, pointing to gathering momentum
in the US economy. The Institute for Supply Management
said its manufacturing index jumped to 64.7% from 60.8%
in the prior month. Readings over 50% indicate growth,
and anything over 55% is considered exceptional.
Seventeen of the 18 industries tracked by ISM expanded in
March, with most reporting increases in production, new
orders and employment. The biggest problems
manufacturers face right now are shortages of some key
supplies that are hindering production and raising prices.
Finding enough skilled workers, especially in a pandemic,
has also been a chronic problem.
After leading in growth for several of the past few months,
Wood Products are now lagging behind most other
industries. Wood Products was the only ISM industry
category reporting a decline in new orders in March.
See:https://www.ismworld.org/supply-management-news-andreports/reports/ism-report-on-business/pmi/march/
US job growth spurs optimism
The US economy created the most jobs in seven months in
March as more Americans got vaccinated and the US
government doled out additional pandemic relief money,
marking the start of what could be the strongest economic
performance this year in nearly four decades.
Economists expect job growth will average about 700,000
per month in the second and third quarters.
That, combined with the fiscal stimulus and about US$19
trillion in excess savings accumulated by households
during the pandemic, is expected to unleash a powerful
wave of pent-up demand.
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