Furniture manufacturers report growth while wood
product manufacturing output dips again
Economic activity in the manufacturing sector grew in
March, with the overall economy achieving a 22nd
consecutive month of growth, say the nation's supply
executives in the latest Manufacturing ISM Report on
The March Manufacturing PMI registered 57.1%, a
decrease of 1.5 percentage points from the February
reading of 58.6 percent. This indicates a slowing of growth
as the 50% mark delineates expansion and contraction.
¡°The US manufacturing sector remains in a demanddriven,
supply chain-constrained environment,¡± said ISM
Chair Timothy Fiore. ¡°In March, progress was made to
solve the labor shortage problems at all tiers of the supply
chain, which will result in improved factory throughput
and supplier deliveries.¡±
The Furniture and Related Products sector was near the
top of the list when it came to overall growth, new orders,
productions, employment, and imports. It was also high on
the list when it came to increased raw material prices and
slower supplier deliveries.
While 15 of the 18 manufacturing sectors followed by
ISM reported growth in March, the Wood Products sector
was one of only two reporting contraction from the
previous month. Last month Wood Products was the only
sector reporting a decrease.
Hardwood flooring is experiencing a retail renaissance
The wood flooring industry is strong and growing. For
2021 wood flooring is estimated to have accounted for
13.5% of the floor covering market according to Market
Insights, up from 11% in 2020.
Michael Martin of ¡®FloorDaily¡¯ says that as consumers
have spent more time at home during the pandemic, they
have developed a desire for high quality products in their
home, such as real wood floors.
Also, costs have narrowed between wood floors and
wood-look products because of tariffs on China, which
produces many wood-look products as well as the raw
materials for their plastic cores.
Martin predicts that if hardwood can maintain its lowprice
increases while wood-look products increase at a
faster pace, we should see a return of more wood in the
homebuilding market as well.
Hardwood flooring represented 14% of the floorcovering
market in 2014, according to the US FlooReport 2020
produced by Market Insights. By 2019, hardwood
flooring dropped below 12%.
Further, in 2016, the total US market share for wood
flooring was about $3.249 billion. In 2019, that figure
dropped to about $2.933 billion, which represents a loss of
about $316 million in just three years.
Housing starts unexpectedly rise in March; mortgage
US homebuilding unexpectedly rose in March but starts
for single-family housing tumbled amid rising mortgage
Housing starts increased 0.3% to a seasonally adjusted
annual rate of 1.793 million units last month, the
Commerce Department reported.
Data for February was revised higher to a rate of 1.788
million units from the previously reported 1.769 million
units. Permits for future homebuilding increased 0.4% to a
rate of 1.873 million units last month.
The 30-year fixed-rate mortgage averaged 5.0% during the
week ended April 14, the highest since February 2011, up
from 4.72% the prior week, according to data from
mortgage finance agency Freddie Mac.
Further increases are likely with the Federal Reserve
adopting an aggressive monetary policy posture as it
battles sky-high inflation.
Rising borrowing costs are combining with higher home
prices to reduce housing affordability for first-time buyers.
The National Association of Home Builders/Wells Fargo
Housing Market index dropped to a seven-month low in
April, with builders blaming the "jump in mortgage rates
and persistent supply chain disruptions."
Still, record low housing supply should continue to
underpin homebuilding this year. There is a record
backlog of houses approved for construction that are yet to
Goldman Sachs estimates that housing starts will increase
5% to 1.7 million this year, arguing that "when housing
markets are tight, like they are today, homebuilders are
likely to keep building because they should have little fear
that homes will sit vacant after completion."
Single-family housing starts, which account for the biggest
share of homebuilding, dropped 1.7% to a rate of 1.200
million units in March.
Canadian housing starts fell 2% in March compared with
the previous month as a decline in multiple urban starts
outweighed a gain in single detached urban starts. The
seasonally adjusted annualized rate of housing starts fell to
246,243 units in March, below analyst expectations of
250,000 and down from a revised 250,246 units in
February, Canadian Mortgage and Housing Corporation
Existing home sales down for second straight month
Existing-home sales decreased in March, marking two
consecutive months of declines, according to the National
Association of Realtors. Sales of existing homes dropped
2.7% in March to a seasonally adjusted, annualized rate of
5.77 million units.
February's reading was also revised downward with a
larger-than-usual dent, from 6.02 million units to 5.93
million. Year-over-year, sales fell 4.5% (6.04 million in
"The housing market is starting to feel the impact of
sharply rising mortgage rates and higher inflation taking a
hit on purchasing power," said Lawrence Yun, NAR's
chief economist. "Still, homes are selling rapidly, and
home price gains remain in the double-digits."
With mortgage rates expected to rise further, Yun predicts
transactions to contract by 10% this year, for home prices
to readjust, and for gains to grow around 5%.
Existing-home sales in the Northeast slid 2.9% in March,
recording an annual rate of 670,000, an 11.8% fall from
March 2021. The median price in the Northeast was
US$390,200, up 6.8% from one year ago.
Existing-home sales in the Midwest declined 4.5% from
the prior month to an annual rate of 1,270,000 in March, a
3.1% drop from March 2021. The median price in the
Midwest was US$271,000, a 10.4% jump from March
Existing-home sales in the South dipped 3.0% in March
from the prior month, registering an annual rate of
2,620,000, a decrease of 3.0% from one year ago. The
median price in the South was US$339,000, a 21.2% surge
from one year prior. For the seventh straight month, the
South experienced the highest pace of price appreciation
in comparison to the other three regions.
Existing-home sales in the West held steady compared to
the previous month, posting an annual rate of 1,210,000 in
March, down 4.7% from one year ago. The median price
in the West was US$519,900, up 5.4% from March 2021.
Home builders say materials are getting easier to find
After months of scrambling to stock up on softwood
lumber, more than half of US building material suppliers
said in March inventories are back to pre-pandemic levels,
according to the latest Burns Building Product Survey¡ª
which covers about 6% of the market for lumber dealers.
After floods in British Columbia disrupted supply late last
year, lumber producers are getting back to their previous
output. Building suppliers, meanwhile, are finding
alternate shipping routes to get around supply chain issues,
including a shortage of rail cars.
As a result, softwood lumber prices have been dropping.
However, homebuilding suppliers predict prices for
engineered wood (including lumber) will rise 18% over
the next year, and building supplies by 11%.
Job creation falls short of forecast
Amid soaring inflation and worries about a looming
recession, the US economy added slightly fewer jobs than
expected in March as the labor market grew increasingly
Nonfarm payrolls expanded by 431,000 for the month,
while the unemployment rate was 3.6%, the US Bureau of
Labor Statistics reported. Economists surveyed by Dow
Jones had been looking for 490,000 on payrolls and 3.7%
for the jobless level.
¡°All in all, nothing shocking about this report. There was
nothing that was really surprising,¡± said Simona Mocuta,
chief economist at State Street Global Advisors.
¡°Even if this report came in at zero, I would still say this is
a very healthy labor market.¡±
While professional and business services contributed the
largest amount of job gains, manufacturing added 38,000
jobs and construction gained 19,000.
Rise in consumer sentiment
Consumer sentiment in the US unexpectedly rose at the
beginning of April as expectations for the economy and
personal finances improved, but it remained at decade-low
The preliminary estimate of the consumer sentiment index
released by the University of Michigan stood at 65.7 in
April, up from 59.4 in March and beating the 59.0
consensus forecast from economists polled by The Wall
April's data mark the first improvement in confidence
since December, but the index is still at its lowest level
since November 2011. The gain in sentiment was driven
by consumers' more upbeat views on short-term
expectations. Retail gas prices have fallen since their
March peak, and that fact was immediately recognized by