Manufacturing contracts but wood sector production
continues to expand
According to supply executives writing in the latest
Manufacturing Institute for Supply Management
Manufacturing Report On Business economic activity in
the manufacturing sector contracted in October despite the
overall economy growing for the 126th consecutive
October was the third consecutive month of Purchasing
Managers¡¯ Index contraction, but at a slower rate than
However, the US wood products industry was among a
handful of US manufacturing industries reporting growth
in October, while most other industries surveyed reported
contraction. Wood product manufacturers in October
reported growth in new orders, new export orders and
order backlogs, as well as a decrease in prices for raw
Industry pleads for relief from impact of trade dispute
US wood products industry groups have seen a dramatic
negative impact on business since the start of the trade
dispute with China. This month the International Wood
Products Association and its member Nathan Jeppson,
CEO of Northwest Hardwoods ¨C one of the US¡¯s largest
hardwood suppliers, met with the Office of the US Trade
Representative, the US Department of Commerce and the
National Economic Council to share their concerns about
the costs to US industry of the trade dispute.
The Washington-based company, Northwest Hardwoods,
announced that it was forced to shut down both a Virginia
and Washington sawmill because of China's retaliatory
tariffs on US imports. China responded to President
Trump's Chinese import tariffs with tariffs of their own in
July 2018. Those included 25% hits on exports of red oak,
walnut, and seven other hardwoods.
A bipartisan group of 38 US representatives sent a letter to
the Trump Administration urging that the hardwood
industry to be included in an assistance package similar to
that provided to US agricultural producers. Jeppson and
other executives believe the tariffs have been disastrous
for the US economy. Others acknowledge they're hurting
right now but believe they're necessary long-term.
Thailand to lose GSP benefits
As of 25 April 25, 2020, a range of products exported
from Thailand, including many wood products, will lose
their eligibility for duty exemption under the US
Generalised System of Preferences (GSP) programme as
the US has concluded that Thailand has failed to provide
internationally-recognised worker rights. Thailand has
requested consultations with US to better understand US
concerns and determine whether changes can be made
before the loss of GSP benefits take effect.
Pimchanok Vonkorpon, Director General of the
Commerce Ministry¡¯s Trade Policy and Strategy Office,
has indicated this decision if implemented would have
only a minimal effect on Thai exports.
Thailand exports just 355 of the 573 products on the list
with a combined value of US$1.28 billion, she noted.
Suspension of the GSP will raise Thailand¡¯s export costs
and she estimated the higher US tariffs would result in
costs of around US$30 million or 0.01% of total export
However, Pimchanok warned that with the removal of the
preferences Thai exporters will face more competition so
they should ensure high quality production and build
strong links with foreign importers so as to preserve their
Consumer spending supporting growth
US gross domestic product, the broadest measure of the
US economy, grew faster than expected in the third
quarter of 2019 but slowed slightly as business investment
continued to decline.
The US Department of Commerce announced that
economic activity grew at an annualised rate of 1.9% in
the third quarter, down slightly from the 2% pace in the
second quarter. Economists polled by Dow Jones had
expected the first look at third-quarter economic growth to
come in at 1.6%.
The better-than-expected data was the result of continued
consumer spending as well as government spending.
Growth in gross private domestic investment, however,
continued to decline in the three months that ended Sept.
30 with a slip of 1.5%, still far better than the 6.3% drop in
the second quarter. Business spending weighed on the
investment number as spending on structures continued to
decline, with a 15.3% fall. The pace of spending on
equipment sank 3.8%.
Imports increased during the third quarter. The most recent
report on the US trade deficit showed the imbalance at
US$54.9 billion at the end of August as imports outpaced
exports in the last full month of summer.
Housing starts rebound, building permits at highest
level in 12 years and home sales rising
US homebuilding rebounded in October and permits for
future home construction jumped to a 12-year high,
pointing to strength in the housing market amid lower
Housing starts increased 3.8% to a seasonally adjusted
annual rate of 1.314 million units last month, with singlefamily
construction rising for a fifth straight month and
activity in the volatile multi-family sector rebounding
solidly. Housing starts advanced 8.5% on a year-on-year
basis in October.
Building permits surged 5.0% to a rate of 1.461 million
units in October, the highest level since May 2007.
Permits were driven by the single-family housing segment,
which increased 3.2% to the highest level since August
2007. Building permits in the populous South region
reached their highest level in more than 12 1/2 years last
The US Department of Commerce reported an increase in
home completions and the stock of homes under
construction, which could help to ease a supply squeeze
that has plagued the housing market.
Existing-home sales rose in October marking a slight
recovery from the decline seen in September according to
the National Association of Realtors (NAR). Starts in the
four major US regions were split last month, with the
Midwest and the South seeing growth, and the Northeast
and the West both reported a drop in sales.
Total existing-home sales increased 1.9% from September
to a seasonally-adjusted annual rate of 5.46 million in
October. Despite lingering regional variances, overall
sales are up 4.6% from a year ago (5.22 million in October
2018). Lawrence Yun, NAR¡¯s chief economist, said this
sales increase is encouraging and he expects added growth
in the coming months.