Category Archives: Finance & Economics

Finance & Economics

What do the latest GDP figures mean for the Bank of Canada?

By Jordan Flequel
BNN Bloomberg Economics
November 30, 2023
Category: Finance & Economics
Region: Canada

Canada’s economy shrank in the third quarter, according to Statistics Canada, adding fuel to the narrative that the Bank of Canada will need to lower interest rates soon to avoid a deep recession – but economists have varying views on when to expect cuts. “We’re not thinking the bank is going to move until the second half of next year,” David Watt at HSBC Canada said. Watt said he believes the Bank of Canada will be “cooler” on rate cuts because it may take some time for inflation to reach the bank’s target rate of two per cent. Douglas Porter, with BMO Capital Markets, agrees. …National Bank of Canada’s Stefane Marion expects the Bank of Canada to cut rates by around 100 basis points by the end of next year. Meanwhile, Tu Nguyen of RSM Canada predicts a rate cut could come as early as the second quarter of next year.

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Canada’s GDP declined 0.3% in the third quarter

Statistics Canada
November 30, 2023
Category: Finance & Economics
Region: Canada

Canada’s real gross domestic product (GDP) declined 0.3% in the third quarter, following a 0.3% increase in the second quarter. The decrease in international exports and slower inventory accumulation were partially offset by increases in government spending and housing investment. …Exports of goods and services fell 1.3% in the third quarter after increasing 1.3% in the second quarter. The leading contributor to the decrease was refined petroleum energy products, which dropped 25.4% in the third quarter after rising 23.9% in the second quarter. …Imports of goods and services edged down 0.2% in the third quarter, following a 1.1% increase in the second quarter.After five consecutive quarterly declines, housing investment … increased 2.0% in the third quarter of 2023. An increase in new construction (+6.5%) was partly offset by a decline in ownership transfer costs (-4.3%), which represents resale activity.

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Rosenberg sees Bank of Canada slashing interest rate to avert household debt crisis

By Shantae Campbell
The Financial Post
November 29, 2023
Category: Finance & Economics
Region: Canada

David Rosenberg

Historic levels of household debt are straining the finances of Canadians to the point that it will be impossible for the Bank of Canada to keep interest rates at current levels for long, according to prominent economist David Rosenberg. “People think that it’s the government debt crisis, (but) no, there is a crisis on Canadian household balance sheets.”. …Rosenberg believes Canada is already in a recession, evidenced by flat or negative real GDP readings in recent quarters. …“The view that they’re going to cut rates and it’s going to lead to this influx of demand for housing … that is not on the horizon,” he said, noting it would be several years before such a rebound would materialize. He also pointed out that excluding shelter costs from Canada’s consumer price index (CPI) would show inflation at 1.9 per cent, below the Bank of Canada’s target.

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Canada’s real GDP edged up 0.1% in September

Statistics Canada
November 29, 2023
Category: Finance & Economics
Region: Canada

Canada’s real gross domestic product (GDP) edged up 0.1% in September. Goods-producing industries (+0.3%) led the growth with a first increase in six months, while services-producing industries were essentially unchanged. Overall, 10 of 20 industrial sectors increased. …The manufacturing sector increased 0.9% in September, after contracting for three months in a row, as both durable and non-durable manufacturing grew. September’s increase largely stems from higher inventory formation in the month. …The construction sector built on gains seen in August (+0.2%) with a 1.0% expansion in September. Residential building construction increased 3.8% in September, the largest monthly gain since April 2021, with activity growing across all forms of structures. Multi-unit, single family homes and home alterations and improvements all contributed to the growth. The agriculture, forestry, fishing and hunting sector decreased 1.4% in September as the majority of subsectors contracted.

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“Weakness Is Spreading”: Economist Says Canadian Housing In For A Slow Spring

By Zakiya Kassam
Storeys Real Estate News
November 28, 2023
Category: Finance & Economics
Region: Canada

A new report looks ahead at Canadian housing in 2024, and forecasts softer sales and prices across all major markets, as well as a drop-off in homebuilding activity. Though it seems more than likely that the Bank of Canada (BoC) is done hiking rates for this cycle, the housing market is expected to remain soft through the spring. Desjardins’ latest housing outlook forecasts that most major markets will deviate from historical trends come spring, with softer sales and prices anticipated. …”Large cities in Ontario and BC have been hit the hardest and face challenging near‐term prospects given the economic weakness we forecast. …Still, we expect 2024 to bring only a mild recession by historical standards. As the Bank cuts rates, we should see sales and prices pick up. …We think homebuilding will moderate against a backdrop of still-high rates, elevated input costs and construction sector labour shortages.”

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Paper, Packaging & Forest Products – What We Learned This Week

By Paul Quinn, Analyst
RBC Capital Markets
November 26, 2023
Category: Finance & Economics
Region: Canada, United States

Lumber and OSB up w/w. According to Random Lengths, the Framing Lumber Composite increased $3 w/w to $376 and the OSB Composite increased $5 w/w to $419. For next week, RBC ElementsTM forecasts that the RL Framing Lumber Composite will increase $10 w/w to $386 and that the RL OSB Composite will decrease $9 w/w to $410.

Existing-home sales fall to the lowest level in 13 years. The U.S. National Association of Realtors reported October existing home sales of 3.79MM (SAAR) units, which was down 4.1% m/m and 14.6% y/y to the lowest level since August 2010.

Pulp shipments to China slow m/m in October. Pulp shipments in October were up 4.5% y/y (hardwood +8.7%; softwood +0.1%). On a m/m basis, shipments were down 12.7%, driven by a 3.3% decrease in softwood and a 19.5% decrease in hardwood. …Despite the steep m/m decline, we note that October was still the fourth-strongest month for shipments to China

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Canadian businesses outlook unchanged since the 3rd quarter

Statistics Canada
November 27, 2023
Category: Finance & Economics
Region: Canada

Real gross domestic product remained essentially unchanged for a second consecutive month in August. Inflationary pressures remain higher than recent historical trends after rising 3.1% year over year in October 2023, although this remains lower than the peak in June 2022. Also in October 2023, employment was little changed, while the unemployment rate rose to 5.7%, marking the fourth monthly increase in the past six months. …Majority of businesses expect to face cost-related obstacles over the next three months. …In the fourth quarter, when asked to indicate which of the businesses’ expected obstacles would be the most challenging, 14.2% of businesses identified rising inflation, 11.0% reported rising interest rates and debt costs, and 10.5% identified rising costs of inputs.

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Real GDP growth in Canada is forecast to be only 0.9 per cent in 2023

The Conference Board of Canada in the Financial Post
November 27, 2023
Category: Finance & Economics
Region: Canada

OTTAWA — Canadian provinces are feeling the pressures of restrictive interest rates, which have had a significant impact on consumer and business spending power, according to new research from The Conference Board of Canada. Real GDP growth in Canada is forecast to be only 0.9 per cent in 2023, followed by a weaker 0.6 per cent in 2024. “Strong population growth across the country continues to be a major positive for the economy, helping to sustain employment and economic activity,” according to Ted Mallett, Director, Economic Forecasting at The Conference Board of Canada. “Still, many households are feeling the pinch, high borrowing costs have added to inflationary pressures resulting in sagging housing markets across most provinces.”

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Canadian home prices could drop by 10 per cent in early 2024: TD Bank

By Megan DeLair
CTV News
November 24, 2023
Category: Finance & Economics
Region: Canada

Canada’s second largest bank says average home prices could drop as much as 10 per cent by early 2024 thanks to a surge in housing supply in two provinces. A previous forecast from TD Bank had called for average home prices to fall around five per cent from their third quarter level through the early part of next year. However, the bank updated its forecast this week to reflect a much steeper drop, citing an upgraded bond yield forecast and a greater loosening in the B.C. and Ontario real estate markets than it had previously predicted. …TD predicts the Bank of Canada will cut interest rates during the second quarter of next year, preventing home prices from dropping further, and that population growth will sustain demand.

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Canada’s inflation rate cools to 3.1% but the cost of living keeps going up

By Pete Evans
CBC News
November 21, 2023
Category: Finance & Economics
Region: Canada

Canada’s consumer price index rose by 3.1% in the year up to October, down from 3.8% the previous month but in line with what economists were expecting. Statistics Canada reported Tuesday that the biggest reason for the deceleration in the cost of living was a drop in the cost of gasoline, which declined by 6.4% during the month of October alone. If gasoline is stripped out of the numbers, the inflation rate would have been 3.6% in October. …Overall, shelter costs are up by more than 6% in the past year. That’s about twice the overall inflation rate. …The costs associated with owning are no better, with mortgage interest costs up by more than 30% in the past year. …If one were to strip mortgage costs out of the numbers, the inflation rate would be 2.2% and if one were to strip out shelter entirely, it would be 1.9%.

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Canada’s raw material index fell 1% in October, softwood lumber fell 6.4%

Statistics Canada
November 16, 2023
Category: Finance & Economics
Region: Canada

Prices of products manufactured in Canada, as measured by the Industrial Product Price Index (IPPI), fell 1.0% month over month in October and were 2.7% lower than in October 2022. Prices of raw materials purchased by manufacturers operating in Canada, as measured by the Raw Materials Price Index (RMPI), declined 2.5% on a monthly basis in October 2023 and fell 0.8% year over year. …Prices for energy and petroleum products fell 5.7% month over month in October, after posting four months of consecutive increases.  …The price of softwood lumber fell 6.4% in October, the largest monthly decrease since March 2023 (-6.7%). Lower lumber prices were partially impacted by ongoing weak seasonal demand. High interest rates also continued to dampen real estate activities.

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Canadian housing starts continue to trend upward in October

Canada Mortgage and Housing Corporation
November 16, 2023
Category: Finance & Economics
Region: Canada

The trend in housing starts was higher in October at 256,280 units, up 1% from 253,957 units in September, according to Canada Mortgage and Housing Corporation (CMHC). The trend measure is a six-month moving average of the monthly seasonally adjusted annual rate (SAAR) of total housing starts for all areas in Canada. The monthly SAAR of total housing starts for all areas in Canada also increased 1% in October (274,681 units) compared to September (270,669 units). The monthly SAAR of total urban (centres 10,000 population and over) housing starts increased 2%, with 257,357 units recorded. Multi-unit urban starts increased 1% to 209,887 units, while single-detached urban starts increased 9% to 47,470 units. Total SAAR housing starts were down 43% in Montreal and 24% in Toronto, while Vancouver recorded an increase of 35%.

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The difference between B.C. and Canada’s job markets is jarring

By Jock Finlayson, Ken Peacock
Business in BC
November 27, 2023
Category: Finance & Economics
Region: Canada, Canada West

Nationally, job creation still looks quite healthy. …But even as employment gains hold up, there are signs conditions in labour market are shifting. In B.C. the economic indicators are also softening, including retail sales, exports, new building activity and residential home sales. But the job market here has weakened much more quickly than elsewhere in the country. Since last fall, total employment growth has slowed from around three per cent to just 1.7 per cent. …Looking ahead, there is ample reason to believe labour market conditions will continue to deteriorate. Higher interest rates are hammering consumer spending and demand, which in turn slows hiring. …At the same time, B.C.’s forest sector is still contracting, new home construction is decreasing and most segments of the province’s manufacturing sector continue to struggle. The difference between the national job market and B.C.’s is already quite jarring. 

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Atlas Engineered reports positive Q3, 2023 results

By Atlas Engineering Products Ltd.
Cision Newswire
November 28, 2023
Category: Finance & Economics
Region: Canada, Canada West

NANAIMO, BC – Atlas Engineered announced its financial and operating results for the three and nine months ended September 30, 2023. Revenue for the third-quarter was $14,369,546, down from $17,638,289 for the same quarter in 2022. Operating profit during Q3 was $2,050,243, down from $4,391,308 in the same quarter in 2022. Revenue for the nine months ended September 30, 2023 was $35,216,250 compared to revenue of $46,909,032 for the nine months ended September 30, 2022. During the third quarter of 2023, the Company acquired Léon Chouinard et Fils Co. located in New Brunswick, Canada. Atlas Engineered has well-established operations in Canada’s truss and engineered products industry.

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Offsite construction could propel housing sector into the realm of affordability

By Richard Lyall, Residential Construction Council of Ontario
The Daily Commercial News
November 17, 2023
Category: Finance & Economics
Region: Canada, Canada East

ONTARIO — To build enough homes to restore affordability to the market we must find ways of improving productivity in the residential sector and specifically look to offsite housing construction as one of the solutions. Don’t get me wrong, there are plenty of remedies that must be adopted. …But offsite construction is certainly a key piece to solving the puzzle. …At a recent housing summit hosted by RESCON, Albert Bendersky of BECC Modular noted there is a 30% to 50% reduction in time spent on a site for mid-size projects when offsite construction is used. …Offsite construction is also more cost-efficient. The construction sites are cleaner and obviously safer as there are fewer vehicles on site. In Sweden, offsite construction now accounts for 84% of the country’s residential construction market share. In Japan, 15% of the country’s new homes are built offsite.

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US Custom Home Building Share Improves in 2022

By Ashok Chaluvadi
NAHB – Eye on Housing
November 30, 2023
Category: Finance & Economics
Region: United States

According to data from the Census Bureau’s Survey of Construction, custom homes share increased to 20.4% of all single-family homes started in 2022 from the 17.6% recorded in 2021. The custom home market consists of contractor-built and owner-built houses—homes built one at a time for owner occupancy on the owner’s land, with either the owner or a builder acting as a general contractor. The alternatives are homes built for sale and homes built for rent. …In 2022, 71.4% of the single-family homes started were built for sale, and 5.9% were built for rent. While the custom-home percentage increased in 2022, the number of custom homes started in 2022 (207,472) was actually higher than the number of custom homes started in 2021 (199,675). The quarterly published statistics show that the custom-home share of single-family starts declined.

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US real GDP increased 5.2% (annualized) in Q3, 2023

US Bureau of Economic Analysis
November 29, 2023
Category: Finance & Economics
Region: United States

Real gross domestic product (GDP) increased at an annual rate of 5.2% in the third quarter of 2023, according to the “second” estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 2.1%. In the advance estimate, the increase in real GDP was 4.9%. The update primarily reflected upward revisions to nonresidential fixed investment and state and local government spending that were partly offset by a downward revision to consumer spending. Imports, which are a subtraction in the calculation of GDP, were revised down. The increase in real GDP reflected increases in consumer spending, private inventory investment, exports, state and local government spending, federal government spending, residential fixed investment, and nonresidential fixed investment. Imports increased (table 2).

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Densified Biomass Fuel Sales Reach 1.06 Million Tons In August

By Erin Voegele
Biomass Magazine
November 29, 2023
Category: Finance & Economics
Region: United States

U.S. manufacturers produced approximately 930,000 tons of densified biomass fuels in August, according to the November edition of the U.S. Energy Information Administration’s Monthly Densified Biomass Fuels Report. Sales of densified biomass fuel reached 1.06 million tons during the month. The EIA collected data from 76 operating manufacturers of densified biomass fuel to complete the report. …The 76 manufacturers surveyed for August had a total combined production capacity of 12.6 million tons per year and collectively had the equivalent of 2,504 full-time employees. Respondents purchased 910,000 tons of raw biomass feedstock in August, produced 930,000 tons of densified biomass fuel and sold 1.06 million tons of densified biomass fuel. Production included 163,971 tons of heating pellets and 766,203 tons of utility pellets.

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US Home Prices Continue to Rise in September

By Jing Fu
NAHB – Eye on Housing
November 28, 2023
Category: Finance & Economics
Region: United States

National home prices continued to increase in September. Despite rising mortgage rates, limited inventory and solid but weakened demand provided solid support for home prices. Locally, all of 20 metro areas had positive home price appreciation in September. The S&P CoreLogic Case-Shiller U.S. National Home Price Index, reported by S&P Dow Jones Indices, rose at a seasonally adjusted annual growth rate of 8.1% in September, slightly slower than a 9.8% increase in August. It is the eighth consecutive annual gain since February 2023. National home prices are now 69% higher than their last peak during the housing boom in March 2006. On a year-over-year basis, the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index posted a 3.9% annual gain in September, following a 2.5% increase in August.

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Ongoing cost inflation may keep US housing prices from falling too much

By Tom Abrams
FactSet.com
November 28, 2023
Category: Finance & Economics
Region: United States

From the point of view of the homebuilders, a big supportive positive for prices is the structural undersupply of homes. Household formations (1.6 million/year) have been higher than the supply of new homes for a few years. Yet the biggest headwind for homebuilder activity is interest rates, both as the cost of builder financing for homes under construction and the impact on mortgage rates for buyers.  Challenged affordability may take a while to resolve, and transaction counts could remain low. A 1% – 1.5% decrease in mortgage rates with general rate stability could help, but ongoing cost inflation may keep housing prices from falling too much lest homebuilder margins get compressed. How this cycle and the general housing shortage across the country might further unfold are unclear. 

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US small properties multifamily construction remains low, built-for-rent remains elevated

By Robert Deitz
NAHB – Eye on Housing
November 28, 2023
Category: Finance & Economics
Region: United States

The missing middle construction sector includes development of medium-density housing, such as townhouses, duplexes and other small multifamily properties. The multifamily segment of the missing middle (apartments in 2- to 4-unit properties) has disappointed since the Great Recession. For the third quarter of 2023, there were just 3,000 2- to 4-unit housing unit construction starts. This is down from a year prior. 

According to quarterly Census data, the count of multifamily, for-rent housing starts remained elevated during the third quarter of 2023. For the quarter, 104,000 multifamily residences started construction. Of this total, 101,000 were built-for-rent. The market share of rental units of multifamily construction starts was near an all-time high of 98% for the third quarter as the already small condo market remained held back due to higher interest rates. 

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US new home sales weaken in October

By Robert Dietz
NAHB – Eye on Housing
November 27, 2023
Category: Finance & Economics
Region: United States

Elevated mortgage rates depressed buyer demand and pushed down new home sales in October. Sales of newly built, single-family homes in October fell 5.6% to a 679,000 seasonally adjusted annual rate, following a notable downward revision in September. …The pace of new home sales in October was up 17.7% from a year ago. Despite the challenging conditions, sales are up 4.6% on a year-to-date basis due to a lack of inventory in the resale market. …New single-family home inventory in October increased to the highest level since January, up 8.3% from the previous month, to 439,000. This represents a 7.8 months’ supply at the current building pace. A measure near a 6 months’ supply is considered balanced. …The median new home sale price in October was $409,300, down 3.1% from September, and down 17.6% compared to a year ago.

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The US housing market is flashing fresh signs of recovery as rising listings and sales point to a possible thaw

By Jennifer Sor
Business Insider
November 24, 2023
Category: Finance & Economics
Region: United States

The US housing market is seeing a positive shift in sales, inventory, and construction – all possible signs the ice age in the residential real estate market could finally be nearing its end. Pending home sales ticked higher 1% on a monthly basis in October, according to Redfin data, reaching the highest seasonally adjusted level seen in a year. Meanwhile, mortgage applications jumped 6% on a monthly basis and soared 40% from levels last year, according to the Mortgage Bankers Association. …Builders also appear to be revving up their pace of construction, though total home building still remains below 2022 levels. …Those are all positive signs for the housing market, which has been at a standstill for much of the past year as sky-high mortgage rates have sidelined both buyers and sellers. …Other experts, though, have warned more trouble could be on the horizon, especially as the US economy begins to decelerate.

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US home size trends down to 10 year low

By Robert Dietz
NAHB – Eye on Housing
November 22, 2023
Category: Finance & Economics
Region: United States

An expected impact of the virus crisis was a need for more residential space, as people use homes for more purposes including work. Home size correspondingly increased in 2021 as interest rates reached historic lows. However, as interest rates increased in 2022 and 2023, and housing affordability worsened, the demand for home size has trended lower. According to third quarter 2023 data from the Census Quarterly Starts and Completions by Purpose and Design and NAHB analysis, median single-family square floor area came in at 2,221 square feet, close to the lowest reading since the end of 2010. Average (mean) square footage for new single-family homes registered at 2,430 square feet. Since Great Recession lows, the average size of a new single-family home is now more than 2% higher at 2,442 square feet, while the median size is more than 5% higher at 2,216 square feet.

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US custom home building slows after a recent gain in market share

By Robert Dietz
NAHB – Eye on Housing
November 21, 2023
Category: Finance & Economics
Region: United States

NAHB’s analysis of Census Data from the Quarterly Starts and Completions by Purpose and Design survey indicates a slowing market for custom home building after a recent gain in market share. There were 50,000 total custom building starts during the third quarter of the year. This marks an almost 17% decline compared to the third quarter of 2022, consistent with weakness experienced throughout the home building sector. Over the last four quarters, custom housing starts totaled 179,000 homes, a 14% decline compared to the prior four quarter total (208,000). After share declines due to a rise in spec building in the wake of the pandemic, the market share for custom homes increased until recently. As measured on a one-year moving average, the market share of custom home building, in terms of total single-family starts, has fallen back to 20%.

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Freddie Mac expects US growth to decelerate, remain tepid in 2024

Freddie Mac
November 21, 2023
Category: Finance & Economics
Region: United States

We expect U.S economic growth to decelerate in the fourth quarter of 2023 and remain tepid throughout 2024. Slower economic growth will result in slower payroll employment growth and an uptick in the unemployment rate. While the economy will avoid tipping into a recession, slower growth and weaker employment will dampen consumer spending. Inflation will continue to moderate but remain above the FOMC’s 2% target throughout next year and monetary policy will remain restrictive. With inflation remaining stubbornly high and the FOMC refraining from cutting rates, longer-term Treasury yields will remain elevated in the near term. We expect the recent volatility in Treasury yields to abate which will allow modest reductions in mortgage rates. However, mortgage rates will likely not fall below 6% in the short run as the higher for longer narrative holds true.

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Leading Economic Index for the U.S. Declines Again in October

The Conference Board
November 20, 2023
Category: Finance & Economics
Region: United States

The Conference Board Leading Economic Index® (LEI) for the U.S. fell by 0.8% in October 2023 to 103.9, following a decline of 0.7% in September. The LEI contracted by 3.3% over the six-month period between April and October 2023, a smaller decrease than its 4.5% contraction over the previous six months. “The US LEI trajectory remained negative, and its six- and twelve-month growth rates also held in negative territory in October,” said Justyna Zabinska-La Monica. “Among the leading indicators, deteriorating consumers’ expectations for business conditions, lower ISM® Index of New Orders, falling equities, and tighter credit conditions drove the decline. After a pause in September, the LEI resumed signaling recession in the near term. The Conference Board expects elevated inflation, high interest rates, and contracting consumer spending to tip the US economy into a very short recession. We forecast that real GDP will expand by just 0.8% in 2024.”

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US housing starts and building permits rise in October

The US Census Bureau
November 17, 2023
Category: Finance & Economics
Region: United States

US privately‐owned housing units authorized by building permits in October were at a seasonally adjusted annual rate of 1,487,000. This is 1.1% above the revised September rate of 1,471,000, but is 4.4% below the October 2022 rate of 1,555,000. Single‐family authorizations in October were at a rate of 968,000; this is 0.5% above the revised September figure of 963,000. …Privately‐owned housing starts in October were at a seasonally adjusted annual rate of 1,372,000. This is 1.9% above the revised September estimate of 1,346,000, but is 4.2% below the October 2022 rate of 1,432,000. Single‐family housing starts in October were at a rate of 970,000; this is 0.2% above the revised September figure of 968,000. …Privately‐owned housing completions in October were at a seasonally adjusted annual rate of 1,410,000. This is 4.6% below the revised September estimate of 1,478,000, but is 4.6% above the October 2022 rate of 1,348,000. Single‐family housing completions in October were at a rate of 993,000; this is 0.9% below the revised September rate of 1,002,000. 

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2023 Insights on the Pulp & Paper Industry

By Stuart Sharp
ResourceWise Forest Products Blog
November 16, 2023
Category: Finance & Economics
Region: United States, International

The 2023 global economy has had far-reaching effects on various industries, including the pulp and paper industry, impacting factors such as prices and demand patterns. …Containerboard continued to maintain its stronghold, accounting for roughly 39% of annual capacity production. Since 2020, it has witnessed a compound annual growth rate (CAGR) of 3.67%. …Printing and writing paper has experienced a negative CAGR of -1.68% since 2020. Despite a short-term bump in capacity production in 2022 due to a slight economic recovery and easing of COVID restrictions, printing and writing paper have been a declining grade for as far back as 2013. …The tissue and towel sector is currently one of the fastest growing in the industry. Since 2020, it has experienced an impressive compound annual growth rate (CAGR) of 4.25%. …Market pulp has experienced a CAGR of 1.87% and is the only major grade where Latin America takes the lead in production instead of the Asia Pacific region.

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US Single-Family Starts Flat in October

By Robert Dietz
NAHB – Eye on Housing
November 17, 2023
Category: Finance & Economics
Region: United States

Single-family construction held steady in October as high mortgage rates depressed demand but more buyers turned to new homes because of a lack of existing inventory. Overall housing starts increased 1.9% in October to a seasonally adjusted annual rate of 1.37 million units. …Within this overall number, single-family starts increased 0.2% to a 970,000 seasonally adjusted annual rate. However, single-family starts are down 10.6% year-to-date. …The multifamily sector, which includes apartment buildings and condos, increased 6.3% to an annualized 402,000 pace. However, multifamily construction 5-plus unit starts are down more than 12% on a year-to-date basis with additional weakness in the forecast ahead. NAHB is forecasting a decline for multifamily construction in 2024. …Overall permits increased 1.1% to a 1.49 million unit annualized rate in October. Single-family permits increased 0.5% to a 968,000 unit rate. However, single-family permits are down 10.6% year-to-date. Multifamily permits increased 2.2% to an annualized 519,000 pace.

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Builder Sentiment Down Again, but Better Building Conditions are in View

By Robert Dietz
NAHB – Eye on Housing
November 16, 2023
Category: Finance & Economics
Region: United States

Builder confidence in the market for newly built single-family homes in November fell six points to 34 in November, according to the NAHB/Wells Fargo Housing Market Index (HMI). This is the fourth consecutive monthly drop in builder confidence, as sentiment levels have declined 22 points since July and are at their lowest level since December 2022. …While builder sentiment was down again, recent macroeconomic data point to improving conditions for home construction in the coming months. In particular, the 10-year Treasury rate moved back to the 4.5% range for the first time since late September, which will help bring mortgage rates close to or below 7.5%. …NAHB is forecasting approximately a 5% increase for single-family starts in 2024 as financial conditions ease with improving inflation data in the months ahead.

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Lumber and Steel Products Lead Building Materials Prices Lower

By David Logan
NAHB – Eye on Housing
November 15, 2023
Category: Finance & Economics
Region: United States

According to the latest Producer Price Index report, the price level of inputs to residential construction less energy declined 0.1% in October (not seasonally adjusted) following a 0.2% increase in September. The index has increased 1.0%, year-to-date, marking the smallest YTD gain since 2019. The Producer Price Index for all final demand goods decreased 1.4% in October after increasing 0.9% in September. …The PPI for gypsum building materials has fallen 1.6%. …The price of steel mill products decreased 2.5% in October. …The PPI for softwood lumber decreased 2.8% in October following a 1.3% increase in September (SA). The index has fallen 12.1% over the last year and is 52.3% lower than the record high reached in 2021. …Ready-mix concrete prices gained 0.8% in October. …The prices of rail and truck transportation of freight rose 1.4% and 1.1%, respectively.

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US Inflation Cools While Shelter Costs Remain High

By Fan-Yu Kuo
NAHB – Eye on Housing
November 14, 2023
Category: Finance & Economics
Region: United States

Consumer prices in October remained unchanged, with the increase in shelter index being offset by the decline in the gasoline index. This cooling inflation increases the probability that the Fed is done increasing rates. Despite the slowdown, shelter costs continue to be a key driver of inflation, accounting for over 70% of the total increase in all items excluding food and energy. …Additional housing supply is the primary solution to tame housing inflation. The Fed’s tools for promoting housing supply are at best limited. In fact, further tightening of monetary policy will hurt housing supply by increasing the cost of AD&C financing. This can be seen as shelter costs continue to rise despite Fed policy tightening. Nonetheless, the NAHB forecast expects to see shelter costs decline further later in 2023.

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Growth in Scottish timber should not be a tall order

By Anthony Harrington
The Herald Scotland
November 30, 2023
Category: Finance & Economics
Region: International

With Scotland’s commercial forestry property sales experiencing a substantial downturn in 2023 due to quality variations and economic factors, Jon Lambert of Goldcrest Land is now pushing for a renewed focus on the production of timber. The annual Goldcrest-Tilhill collaboration on the Forestry Special Report provides a market commentary on the deals and listings of sales of commercial forestry properties through 2023. …The figures for 2023 show a drop of between 10% and 20% in the total sales of woodland properties, by comparison with the 2022 figures. …“With high inflation, investors want to see much greater returns on their investments. At the same time, we are going through a period of depressed prices for mature timber. This is partially due to falling demand in the UK construction and house building sectors,” Lambert comments. However, he is confident that the future of the forestry sector continues to look bright.

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Japan Housing Starts Fall 6.3%

Business Insider
November 30, 2023
Category: Finance & Economics
Region: International

TOKYO – Japan’s housing starts decreased for the fifth straight month in October, though at a slower-than-expected pace, data from the Ministry of Land, Infrastructure, Transport, and Tourism showed on Thursday. Housing starts dropped 6.3 percent year-on-year in October, following a 6.8 percent decline in September. Economists had expected a stable decline of 6.8 percent. Data showed that new construction was contracted in all categories, including owned, issued, rented, and built for scale. The seasonally adjusted annualised number of housing starts rose to 808,000 in October from 800,000 in the previous month. Data also showed that construction orders received by the big 50 contractors recovered 4.2 percent annually in October, reversing a 3.0 percent decrease in the prior month. [END]

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European agriculture & forestry energy consumption stable in 2021

Eurostat
November 29, 2023
Category: Finance & Economics
Region: International

The amount of energy used directly by the agriculture and forestry sector in the EU was equivalent to 28.3 million tonnes of oil in 2021. This quantity was relatively unchanged (-0.3%) from that used in 2020. This was in stark contrast to total energy consumption, which rebounded (+6.2%) from the Covid-impacted level of 2020. The agriculture and forestry sector accounted for 3% of the total energy consumed in the EU in 2021. …Within the agriculture and forestry sector, there were considerable contrasts between EU countries. Direct energy consumption levels in 2021 were lower than 2020 in nine EU countries, the steepest rates of decline were recorded for Estonia (-19.4%), Latvia (-6.5%) and Hungary (-5.3%). By contrast, levels were at least 5% higher than in 2020 in Greece (+7.5%), Lithuania (+7.1%), Romania (+6.8%), Malta (+6.3%), Austria (+5.8) and Portugal (+5.5%).

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UK Forestry values fall in increasingly cautious market

By BSW Group
Global Wood
November 24, 2023
Category: Finance & Economics
Region: International

UK — Commercial forestry values fell for the first time in almost a decade with a 10%-20% drop in the past year, according to a new industry report launched in London on November 21. …The report said: “Compared to the rampaging run of forestry as an asset class over the last 17 years, the lagging effect of economic turmoil from the mini budget, the war in Ukraine, and rising interest rates have softened market activity across the board in both afforestation and commercial/amenity woodlands.” While highlighting the enduring “resilience” of UK forestry, the continuing emergence of new investors and confidence in the long-term future of timber underpinned by the need to replace plastic, steel and concrete with sustainable forest products, the report found that supply tightened, prices dropped and buyers became increasingly selective in the last year. Additionally, demand for timber slowed sharply in the short-term leading to a dramatic reduction in processing volumes.

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Hope for a recovered paper demand boost in the new year

By Marissa McNees
Recycling Today
November 24, 2023
Category: Finance & Economics
Region: International

In a year marked just as much by closures and downtime as with facility openings, companies across the paper industry are hopeful a demand boost is on the horizon. Since the start of the year, WestRock, Packaging Corp. of America, International Paper, Greif, Domtar and ND Paper all have announced shutdowns in response to what has been a challenging market, with box demand reaching lows not seen in more than a decade. …“International Paper has been rolling downtime through their mills; WestRock’s done permanent closures; [and] Packaging Corp. [of America] has done a … permanent idle of sorts of their new Wallula [, Washington] mill.” While all three of those companies have reported less downtime quarter to quarter, they each continue to report significant economic downtime compared with a year ago.

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Log export prices firm as sales to China pick up

By Monique Steele
Radio New Zealand News
November 21, 2023
Category: Finance & Economics
Region: International

NEW ZEALAND — Prices for log exports are slowly improving, but a forestry consultant says the sector must find new international markets to reduce its reliance on China. Export prices have firmed this month, with sales to New Zealand’s largest customer, China, picking up – despite its post-Covid construction slowdown. November prices rose $9 on October, approaching NZ$110 per Japanese Agricultural Standard metre-squared at the wharf gate of South Island ports, and $5-10 more for North Island exporters. Sales are solid for log exporters. New Zealand exports to China have been dropping. …Allan Laurie said it was vital forestry companies tried to seek new markets. “China continues to be 80% of what we do into export markets,” Laurie said. …”It’s really time for New Zealand forestry Inc to get out into the world and start to look at other markets and improve our sales opportunities internationally, looking to non-traditional markets.”

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A new report on China’s forest, log & lumber outlook to 2035

By Russ Taylor and Marbles Groome
Russ Taylor Global
November 16, 2023
Category: Finance & Economics
Region: International

Russ Taylor (Canada) and Margules Groome (New Zealand & Australia) have teamed up to present a strategic analysis and outlook on China. …The China wood products market is becoming complex! A slowdown is one thing, but there are some new and evolving fibre supply dynamics that will be played out in China over the next few years and beyond that should be game changers. We are predicting by when and what happens when China’s economic and construction problems are ameliorated, and a degree of confidence is restored. This is likely to result in significant supply-side responses and changes. All these factors could lead to some surprising and positive changes in prices for softwood log and lumber exporters. The current ongoing rapid expansion of the China’s pulp and paper capacity will also create exciting opportunities for hardwood woodchip exporters.

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