Prices of Softwood Lumber and OSB Keep Climbing
The prices of softwood lumber and OSB increased by 2.2% and 3.3%, respectively, in May according to the latest Producer Price Index (PPI) release by the Bureau of Labor Statistics. The increases were a return to the 2017 norm, as softwood lumber and OSB have led building materials price gains in every month except April, when gypsum prices rose 5.1%. In contrast, prices paid for gypsum and ready-mix concrete fell for the first time since January, decreasing by 0.2% and 0.4%, respectively, in May.
Unsurprisingly, the price of softwood lumber increased yet again in May. The increase pushed the softwood lumber price index to its highest level since September 2004. At that time, the prior U.S.-Canada softwood lumber trade dispute had been ongoing for over three years and prices had increased 38.5% since the expiration of the previous agreement in April 2001. As shown below, the price index of softwood lumber has increased 12.9% since the beginning of 2017 and is 21.6% higher than it was in January 2016.
These increases have been largely, if not completely, due to the ongoing softwood lumber trade dispute between the U.S. and Canada. Although upward pressure has abated in recent weeks, the Random Lengths Framing Lumber Composite Price (below) has still risen more than 11.5% since January.
The apparent incongruity between the May decline in Random Lengths Framing Lumber Composite Price (FLCP) and increase of PPI results from one notable difference between the measures. The FLCP includes data for framing lumber only, while the softwood lumber component of the PPI represents the price level of all softwood lumber regardless of its end-use. As the Softwood Lumber Agreement of 2006 exempted some products, the price increases in anticipation of duties have been concentrated in framing lumber.
OSB prices (below) rose 3.3% in May and have increased 22.4% over the last 12 months. The price index for OSB has risen 14.0% and 34.3% since January of 2017 and January 2016, respectively (see below).
The 0.2% decrease in prices paid for gypsum products (seasonally adjusted) was welcome–albeit modest–relief from the three consecutive monthly increases preceding it. Ready-mix concrete prices fell 0.4%% on a seasonally adjusted basis in May, the first decrease since January.
The economy-wide PPI was unchanged in May. The level reading resulted from a 0.3% increase in prices for final demand services offset by a 0.5% decrease in the index for final demand goods—the largest decrease in goods prices since February 2016. The overall PPI weights services more heavily than goods prices, as services represent a comparatively larger size of the economy. Final demand prices for core goods (i.e. goods excluding food and energy) continued the upward trend that began in November 2016, climbing 0.1%. Prices for core goods less trade services fell 0.1%, the first decline since May 2016.
The majority of the decrease in prices paid for final demand goods was due to a 3.0% decline in prices paid for final demand energy, the largest monthly decline since February 2016. Most of the May advance in the index for final demand services resulted from a 1.1% increase in prices paid trade services, the category that represents margins received by wholesalers and retailers).
Unsurprisingly, the price of softwood lumber increased yet again in May. The increase pushed the softwood lumber price index to its highest level since September 2004. At that time, the prior U.S.-Canada softwood lumber trade dispute had been ongoing for over three years and prices had increased 38.5% since the expiration of the previous agreement in April 2001. As shown below, the price index of softwood lumber has increased 12.9% since the beginning of 2017 and is 21.6% higher than it was in January 2016.
These increases have been largely, if not completely, due to the ongoing softwood lumber trade dispute between the U.S. and Canada. Although upward pressure has abated in recent weeks, the Random Lengths Framing Lumber Composite Price (below) has still risen more than 11.5% since January.
The apparent incongruity between the May decline in Random Lengths Framing Lumber Composite Price (FLCP) and increase of PPI results from one notable difference between the measures. The FLCP includes data for framing lumber only, while the softwood lumber component of the PPI represents the price level of all softwood lumber regardless of its end-use. As the Softwood Lumber Agreement of 2006 exempted some products, the price increases in anticipation of duties have been concentrated in framing lumber.
OSB prices (below) rose 3.3% in May and have increased 22.4% over the last 12 months. The price index for OSB has risen 14.0% and 34.3% since January of 2017 and January 2016, respectively (see below).
The 0.2% decrease in prices paid for gypsum products (seasonally adjusted) was welcome–albeit modest–relief from the three consecutive monthly increases preceding it. Ready-mix concrete prices fell 0.4%% on a seasonally adjusted basis in May, the first decrease since January.
The economy-wide PPI was unchanged in May. The level reading resulted from a 0.3% increase in prices for final demand services offset by a 0.5% decrease in the index for final demand goods—the largest decrease in goods prices since February 2016. The overall PPI weights services more heavily than goods prices, as services represent a comparatively larger size of the economy. Final demand prices for core goods (i.e. goods excluding food and energy) continued the upward trend that began in November 2016, climbing 0.1%. Prices for core goods less trade services fell 0.1%, the first decline since May 2016.
The majority of the decrease in prices paid for final demand goods was due to a 3.0% decline in prices paid for final demand energy, the largest monthly decline since February 2016. Most of the May advance in the index for final demand services resulted from a 1.1% increase in prices paid trade services, the category that represents margins received by wholesalers and retailers).
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