US forest industry performance in July and August was recently reported by both the US government and the Institute for Supply Management.
On the heels of a 0.4 percent increase in June, total industrial production (IP) rose 0.2 percent MoM (+2.2 percent YoY) in July. Manufacturing output disappointed with a 0.1 percent decline, however—dragged down by a 3.6 percent falloff of motor vehicles and parts—and remained little changed, on net, from February.
The Institute for Supply Management's (ISM) monthly sentiment survey suggested the expansion in US manufacturing accelerated in August. The PMI registered 58.8 percent, up 2.5 PP. (50 percent is the breakpoint between contraction and expansion.) Only the customer-inventory, export and import sub-index values were noticeably lower.
The pace of growth in the non-manufacturing sector also accelerated (+1.4 PP) to 55.3 percent. The only sub-index of economic consequence with a noticeably lower value was inventories.
Of the industries we track, only Ag & Forestry contracted; Wood Products was unchanged. "Business has strengthened over the summer, beyond [the] same period last year," observed one Paper Products respondent. "Impressive numbers month-over-month," added a Construction respondent; "8 percent more projects and 4 percent higher revenues."
The producer price index (PPI) declined 0.1 percent in July (+1.9 percent YoY). Over 80 percent of July’s decrease is attributable to the index for final demand services—especially margins for chemicals and allied products wholesaling (-5.8 percent). Prices for final demand goods edged down 0.1 percent. Meanwhile, forest products PPIs were similar to last month:
- Pulp, Paper & Allied Products rose 0.5 percent (+3.9 percent YoY)
- Lumber & Wood Products: 0.0 percent (+2.6 percent YoY)
- Softwood Lumber: +0.6 percent (+9.9 percent YoY)
- Wood Fiber: -0.5 percent (-1.4 percent YoY)
We see QoQ changes in the CPI fluctuating between +0.5 percent and +3.3 percent annualized rates, for an overall average of +1.8 percent. The PPI will range between +0.2 percent and +3.1 percent, averaging +1.0 percent overall.