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US and Canada Timber and Wood Product Price and Market Report
16 – 30th Apr

Report from North America

 US manufacturing sector weakest in nearly three years
US manufacturing activity slumped to its lowest level in nearly three years in March as new orders continued to contract and activity could decline further amid tightening credit conditions. The Institute for Supply Management (ISM) said that its manufacturing PMI fell to 46.3 last month, the lowest reading since May 2020, from 47.7 in February. Economists polled by Reuters had forecast the index dipping to 47.5.

It was the fifth straight month that the PMI remained below 50, which indicates contraction in manufacturing. But other data suggests that manufacturing, which accounts for 11.3% of the economy, continues to grow moderately.

Manufacturing expanded at a 4.5% annualized rate in the fourth quarter, the government reported last week. Reports last month also showed orders for capital goods excluding aircraft eking out a small gain in February as did manufacturing output.

Of the 18 manufacturing industries surveyed by ISM, 12 reported contraction in March with the Furniture and Related Products sector reporting the biggest contraction.


US and Canadian new home starts declined in March
US home building pulled back in March, having fallen 0.8% in February when multifamily home construction failed to keep pace with an increase in construction of single-family homes.

Housing starts, a measure of new home construction, was down 17% from a year ago according to data released by the US Census Bureau. After surging in February following five consecutive months of decline March housing starts fell to a seasonally adjusted annual rate of 1.420 million, down from the revised February estimate of 1.432 million. Single‐family housing starts in March rose 2.7% from the revised February figure, at a seasonally adjusted annual rate of 861,000.

US housing starts recorded big drops in May and July last year when spiking mortgage rates pushed many prospective home buyers to the sidelines. Starts bounced back slightly in August but fell through January. Since then, with more positive economic news, building has perked up.

As mortgage rates trended lower, builders have begun to feel more optimistic that conditions may improve in 2023.

Building permits, which track the number of new housing units granted permits, also fell in March following two months of gains, falling 8.8% from the revised February rate, and were down 24.8% from a year ago. In March, building permits were at a seasonally adjusted annual rate of 1.413 million.

Canadian housing starts fell more than expected in March compared with the previous month as groundbreaking decreased on multiple unit and single-family detached urban homes.
The seasonally adjusted annualised rate of housing starts fell 11% to 213,865 units from a revised 240,927 units in February, the Canadian Mortgage and Housing Corporation said.



Sales for existing homes slumped in March
Existing-home sales in the US edged lower in March according to the National Association of Realtors. Total existing-home sales fell 2.4% from February to a seasonally adjusted annual rate of 4.44 million in March. Year-over-year sales dipped 22% (down from 5.69 million in March 2022).

Data on mortgage applications was lower as well. The Mortgage Bankers Association reported that higher lending rates have led to a 10% decline in loan applications as would-be buyers face affordability challenges.

"Home sales are trying to recover and are highly sensitive to changes in mortgage rates," said NAR Chief Economist Lawrence Yun. "Yet, at the same time, multiple offers on starter homes are quite common, implying more supply is needed to fully satisfy demand. It's a unique housing market."

Existing-home sales in the Northeast were unchanged from February at an annual rate of 520,000 in March, but down 21.2% from March 2022. In the Midwest, existing-home sales retracted 5.5% from one month ago to an annual rate of 1.03 million in March, falling 17.6% from the previous year.

Existing-home sales in the South decreased by 1.0% in March from February, to an annual rate of 2.07 million, a 20.4% decrease from the prior year. In the West, existing-home sales declined 3.5% from the previous month to an annual rate of 820,000 in March, down 30.5% from the prior year.

The median price for an existing home fell by 0.9% from last March, dropping to US$375,700 this year.

This drop is the largest since January 2012, when home prices fell 2% year on year. It’s also the second month in a row that home prices fell.


US hiring remains steady
The US Department of Labor’s report on US employment for March showed hiring slowed more than expected but remained steady. The jobs report showed that American employers added 236,000 jobs last month, a slowdown from February’s 326,000 and slightly below economists’ expectations. Wages, meanwhile, grew 0.3% from February to match expectations. But year-on-year wage gains slowed to 4.2% from 4.6%. Employment continued to trend up in leisure and hospitality, government, professional and business services and health care but showed little change over the month in other major industries, including construction and manufacturing.

A cooler job market is exactly what the US Federal Reserve (Fed) is trying to achieve. Raising rates is one of the Fed’s most effective ways to undercut inflation but it’s a notoriously blunt tool that works only by slowing the entire economy.

Many economists fear a recession later this year. But some say a narrow possibility still exists where the Fed could raise rates just enough to get inflation fully under control without causing a severe recession.


Consumer sentiment picked up in April
American consumers appear as uncertain over the state of the economy as professional pundits and the Fed. The University of Michigan’s estimate of consumer sentiment released in April found consumers slightly more optimistic with its overall index rising to 63.5 from 62 in March.

However, expectations for inflation a year from now rose sharply, to 4.6% from 3.6% a month earlier while staying in the same range of 2.9% to 3.1% they have been in 20 months. That comes even as recent reports on inflation have shown it dropping markedly.

“Consumer sentiment was essentially unchanged this month, inching up less than two index points from March,” said Joanne Hsu, Michigan survey Director. “Sentiment is now about 3% below a year ago but 27% above the all-time low from last June.” Hsu added that sentiment rose among lower-income consumers while falling among consumers with higher incomes. “While consumers have noted the easing of inflation among durable goods and cars, they still expect high inflation to persist, at least in the short run,” Hsu said.


Growth of large national home
While the US construction industry remains one of the economy’s most fragmented industries large national home builders have seen growing levels of concentration in market share. Of the 65,000 or so single-family home builders in the US the 100 largest builders now account for more than 50% of all single-family home sales, up from one third back in 2001.

The 10 largest builders now account for about a quarter of all single-family homes sales nationally while the top two (D.R. Horton and Lennar) account for about one in every six new single-family homes sold. A recent Joint Center for Housing Studies at Harvard University working paper suggests that these large builders are increasing their scale through strategic acquisitions and by concentrating their activities in select major metropolitan areas across the country.

The Center’s Kermit Baker writes that for the flooring industry this increased concentration means that securing just a few new customers can yield a significant increase in market share. With large builders looking to fuel their growth by concentrating in key metro areas flooring suppliers need not have a robust national footprint to service these customers in selected markets.



LM       Loyale Merchant, a grade of log parcel  Cu.m         Cubic Metre
QS        Qualite Superieure    Koku         0.278 Cu.m or 120BF
CI          Choix Industriel                                                       FFR           French Franc
CE         Choix Economique                                                        SQ              Sawmill Quality
CS         Choix Supplimentaire      SSQ            Select Sawmill Quality
FOB      Free-on-Board     FAS            Sawnwood Grade First and
KD        Kiln Dry                               Second 
AD        Air Dry        WBP           Water and Boil Proof
Boule    A Log Sawn Through and Through MR              Moisture Resistant
              the boards from one log are bundled                      pc         per piece      
              together                      ea                each      
BB/CC  Grade B faced and Grade C backed MBF           1000 Board Feet          
              Plywood   MDF           Medium Density Fibreboard
BF        Board Foot F.CFA         CFA Franc        
Sq.Ft     Square Foot              Price has moved up or down
Source:ITTO'  Tropical Timber Market Report