The Bank of Canada held its key overnight interest rate at five per cent for the fourth consecutive time, as inflation remains higher than desired and economic growth has not slowed enough to warrant a cut. “The Council is still concerned about risks to the outlook for inflation, particularly the persistence in underlying inflation,” the central bank said. …The central bank did, however, signal a shift in discussions. “With overall demand in the economy no longer running ahead of supply, governing council’s discussion of monetary policy is shifting from whether our policy rate is restrictive enough to restore price stability to how long to stay at the current level,” Bank of Canada governor Tiff Macklem said.
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WASHINGTON, D.C. – The Association of American Railroads (AAR) reported U.S. rail traffic for the week ending January 13, 2024. For this week, total US weekly rail traffic was 457,453 carloads and intermodal units, down 4.1% compared with the same week last year. Total carloads for the week ending January 13 were 213,277 carloads, down 10.2% compared with the same week in 2023, while U.S. weekly intermodal volume was 244,176 containers and trailers, up 1.9% compared to 2023. Three of the 10 carload commodity groups posted an increase compared with the same week in 2023. They were chemicals, up 2,591 carloads, to 33,076; petroleum and petroleum products, up 389 carloads, to 10,374; and forest products, up 80 carloads, to 8,193. 
A report filed with the USDA Foreign Agricultural Service’s Global Agricultural Information Network estimates that Canadian wood pellet production was down 6 percent in 2023, with exports down 14 percent. The expected decline in Canada’s wood pellet production is attributed to the closure of pellet mills, reduction in allowable cut and a high-activity wildfire season. The decline in exports is expected to result from reduced production coupled with diminished demand from South Korea and the U.K. for Canadian wood pellets. …As of 2023, 44.3 percent of Canada’s wood pellet production capacity was located in British Columbia, with 21 percent in Quebec, 16 percent in Alberta, 8.8 percent in New Brunswick, 6.1 percent in Ontario and the remaining 3.7 percent located in other areas of the country. 
Economists at TD Bank are predicting communications challenges ahead for the Bank of Canada if it cuts interest rates this spring while housing costs remain high. The Bank of Canada is widely expected to start reducing its trendsetting interest rate this year after a series of rate hikes – with cuts coming potentially as early as this spring. TD economists Beata Caranci and James Orlando said if rate cuts indeed come to pass this spring, it means rates will start coming down amid above-target inflation and high shelter costs. This could lead to confusion among the public, the economists noted, and will “create a communication challenge” for the central bank when it comes to anchoring household inflation expectations, as people can be particularly sensitive to rising housing costs. 
According to the U.S. Census Bureau’s latest estimates, the U.S. resident population grew by 1,643,484 to a total population of 334,914,895. The population growth rate reached its highest level since the pandemic at 0.49%. This is just above the 2019 growth rate (0.46%). The Census Bureau reports that the primary source for the increase in population growth was net international migration, as migration levels returned to pre-pandemic levels. …The other driver of the U.S. population growth rate was positive natural births (births minus deaths), which increased the total population by 504,495. The level of positive natural births in 2023 was 126% higher than 2022 largely due to the 8.9% drop in the number of deaths in 2023. …Regionally, the Northeast region was the only region to lose population, declining 0.08%. The South region led in population growth at 1.11% while the Midwest population grew 0.18% and the West grew 0.17%.
WASHINGTON – The American Forest & Paper Association released its December 2023 Packaging Papers Monthly report. Total packaging papers & specialty packaging shipments in December remained essentially flat (+0.4%) compared to December 2022. They were down 1% when compared to the same 12 months of 2022. Shipments of the biggest subgrade in bleached packaging papers – food wrapping – were 24,100 short tons for the month of December, down 15.8% year-to-date. The unbleached packaging papers operating rate was 78.5%, down 5.9 points from December 2022 and also down 5.9 points year-to-date.
The NAHB/Westlake Royal Remodeling Market Index (RMI), a measure of sentiment among professional remodelers, for the fourth quarter posted a reading of 67, increasing two points compared to the previous quarter. Remodelers’ sentiment was quite positive at the end of 2023, when seasonally adjusted for the slowdown that invariably occurs during that part of the year. High costs remain an issue in some places, but in many markets, customers seem to have adjusted to the unavoidable higher prices. Even though the RMI is down slightly year-over-year, the index remains solidly in positive territory, a trend observed since the second quarter of 2020. Looking forward, NAHB expects market conditions to improve throughout 2024 as interest rates continue to decline.
After reporting a sharp increase in new residential construction in the U.S. in the previous month, the Commerce Department released a report on Thursday showing a notable pullback by housing starts in the month of December. The Commerce Department said housing starts slumped by 4.3% to an annual rate of 1.460 million in December after spiking by 10.8% to a revised rate of 1.525 million in November. …Single-family housing starts led the pullback, tumbling by 8.6% to a rate of 1.027 million in December after soaring by 15.4% to a rate of 1.124 million in November. Meanwhile, multi-family housing starts surged by 8.0% to a rate of 433,000 in December after slipping by 0.3% to a rate of 401,000 in November. …The report also said building permits surged by 1.9% to an annual rate of 1.495 million in December after tumbling by 2.1% to 1.467 million in November. Single-family permits shot up by 1.9% to a rate of 994,000, while multi-family permits jumped by 2.2% to a rate of 501,000.
Per the Mortgage Bankers Association’s survey through the week ending January 5th, total mortgage activity increased 9.9% from the previous week, and the average 30-year fixed-rate mortgage rate rose five basis points to 6.81%. After the total mortgage activity index fell 10.7% in the last week of December, it bounced back in the first week of the year. The data includes an adjustment for New Year’s. The Market Composite Index, a measure of mortgage loan application volume, rose by 9.9% on a seasonally adjusted basis from one week earlier. Purchasing activity increased 5.6% and refinancing activity increased 18.8% week-over-week. Purchasing activity was 6.8% lower than one year ago, and refinancing activity was up 30.2% from the same week one year ago.
US inflation accelerated in December as Americans paid more for housing and driving, challenging investor bets that the Federal Reserve will cut interest rates soon. The consumer price index increased 3.4% in the year through December, the most in three months according to government figures. …On an annual basis, the so-called core measure increased 3.9%. …Despite the pickup, the figures cap a year in which inflation broadly eased without doing much damage to the labor market, setting the stage for the Fed to lower borrowing costs this year. …“The surprisingly strong CPI print for December shows the road to a durable return to 2% inflation is bumpy, and the last mile could be difficult.”…Inflation is expected to moderate further this year toward the Fed’s 2% target, especially as housing costs are seen easing. However, other factors like rising shipping costs could put upward pressure on oil prices.
Exports of Southern Pine lumber (treated and untreated) were up 3% in November over October and 10.8% higher than the same month in 2022, according to November data from the USDA’s Foreign Agriculture Services’ Global Agricultural Trade System. Year-to-date exports of Southern Pine and treated lumber through November 2023 continue to run 5% ahead of the same period in 2022. November 2023 Southern Pine Exports notes of interest include:
Europe’s sawlog market has taken hits from declining wood demand, fluctuation in log flows, and ‘unprecedented swings’ in sawlog prices. In the third quarter of 2023, the European Sawlog Price Index (ESPI) fell by 12% quarter-over-quarter (q-o-q); Central Europe saw the biggest decline. For the first nine months of the year, these falling prices are thought to have stemmed from reduced production at Austrian, Czech, and German sawmills. …Spruce prices were up by almost 10% from 3Q/22 to 3Q/23 in Sweden. WRI attributes this to slower log deliveries from private forest owners, mostly in the southern region of the country. Besides this, however, prices have been almost static in the Nordic countries. …Russia’s invasion of Ukraine is cited as a primary cause for the tightening supply of hardwood pulpogs throughout the year.
UK – Latest statistics from Timber Development UK (TDUK) show 2023 import volumes catching up on the previous year. The gap between the cumulative annual volume of timber and panel imports into the UK during the first 10 months of 2023 compared to the same period in 2022 has narrowed further, according to the TDUK’s report. TDUK Timber Statistics Industry Facts & Figures, January 2024, shows the deficit at around 123,000m3, down from 184,000m3 at the time of the previous report. …The countries most responsible for the increase are Sweden, which upped its volumes by 17% over the 10-month period, and Finland, which boosted its volumes to the UK by 8%. However, the value of softwood imports in January-October 2023 was 25% lower year-on-year. Hardwood imports were down by 22.7%, with cumulative volume for January-October 2023 at 390,000m3.
Lumber prices continued their retreat in the latest Producer Price Index report from the U.S. Bureau of Labor Statistics. Compared to a year ago, softwood lumber is down 14.6 percent. Plywood and millwork were also down, but not nearly as much. The Producer Price Index for final demand fell 0.1 percent in December, seasonally adjusted, the U.S. Bureau of Labor Statistics reported Friday. Final demand prices moved down 0.1 percent in November and 0.4 percent in October. On an unadjusted basis, the index for final demand rose 1.0 percent in 2023 after increasing 6.4 percent in 2022. The December decrease in the index for final demand is attributable to a 0.4-percent drop in prices for final demand goods. The index for final demand services was unchanged.