The Wood and Fiber Supply Chain Experts
Industry At a Glance: From Forest2Market's Economic Outlook
From the June 2010 Forest2Mill newsletter.
New manufacturing and service sector orders provide some short-term
optimism for Forest2Market’s economic outlook.
Up during eleven of the last twelve months, new orders at the total manufacturing level
increased $5.0 billion (1.3 percent) to $391.5 billion in March. New orders for nondurable goods
provided most of that impetus by increasing $6.0 billion (2.9 percent) to $212.8 billion. But
durable goods orders dropped by $1.0 billion (0.6 percent) to $178.7 billion, after three
consecutive monthly increases. Excluding transportation (the biggest “negative”), new durables
orders increased 3.1 percent.
Economic activity in the manufacturing sector also expanded in April for the ninth
consecutive month according the Institute for Supply Managements (ISM).15 “The rate of growth as
indicated by the Purchasing Managers’ Index [60.4 percent] is the fastest since June 2004,” said
Norbert Ore, chair of ISM’s Manufacturing Business Survey Committee. “Manufacturers continue to see
extraordinary strength in new orders, as the New Orders Index has averaged 61.6 percent for the
past 10 months. The signs for employment in the sector continue to improve as the Employment Index
registered its fifth consecutive month of growth. Overall, the recovery in manufacturing continues
quite strong, and the signs are positive for continued growth.” With the Non-Manufacturing Index
registering 55.4 percent, the service sector expanded at the same pace in April as it had in March.
The performance of individual industries that are at least somewhat related to the forest
products sector improved “across the board” during April. All industries except Agriculture,
Forestry, Fishing & Hunting reported growth in new orders; however, only Paper Products
reported growth in new export orders. All but Real Estate, Rental & Leasing reported stable or
growing employment.
Input costs were higher in April, although the gains were smaller than in March. Commodities
whose prices rose in April included fuel, corrugated containers, pulp, envelopes, lumber and wood
products, OSB, paper, and paper products.
Table 1. Performance overview for Forest-Related Industries.
Data source: Institute for Supply Management
Based on its semiannual survey of purchasing and supply executives, ISM expects economic growth to continue in the U.S. manufacturing and non-manufacturing sectors throughout the remainder of 2010.16 Wood Products led the list of 15 manufacturing industries expecting growth of at least 3 percent in 2010, while Paper Products was ranked fifth in terms of expected growth rates. Agriculture, Forestry, Fishing & Hunting was the only relevant service industry expecting growth in 2010. Manufacturers forecast a 3.8 percent increase in input prices, while non-manufacturers think their cost increases will remain below 1.7 percent for the entire year.
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Additional Stories from the June 2010 Forest2Mill Newsletter:
Housing
Market Update
Chip
Prices in the South and PNW Near Parity
“
Got Trees?” Check-Off Programs in the Forest Products Industry
Common
Ground in the Forest
News:
Georgia Pacific & Dixie Pellet