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Lumber & Plywood Drops And New PPI Inflation Data & Jobs Released

Washington D.C., United Stated Of America- Lumber prices continue on a volatile summer downward trend, reaching $490 this morning for September deliveries. This would translate into wholesale price levels of forward priced projects of $550-650 and in addition plywood panels have been trading at the $850 range or near a $1000-1200 wholesale forward priced project. Making better sense for multi-family construction. We can expect a influx in starts. Still higher prices then pre-pandemic. Prices are felt at the consumer and small business level the hardest.


Consumers, Small Contractors and Home Builders are being hit the most. Small to mid-sized lumber yards and retailers are still sitting on stock bought at the height of the volatility causing an extended continued price inflation for the smaller contractors and homeowners while extremely profitable for lumber traders.

Price decreases are being seen due to mass expansion of competition and builder price stonewalling. Most small-mid sized builders Bylt: News has surveyed are refusing to purchase material and start projects till prices come down. The traditional summer months are also to blame.

We have seen an extraordinary influx from Canadian lumber companies this year as well as a fast paced United States industry competition of expansion across the U.S.

 

A look at Lumber Futures As Of 8:15 AM 8/12/20210:

Random Length Lumber Futures – Quotes

Month Prior
Settle
Open High Low Volume Updated

SEP 2021
LBSU1

493.90
06:00:00 CT
12 Aug 2021

NOV 2021
LBSX1

525.00
06:00:00 CT
12 Aug 2021

JAN 2022
LBSF2

553.00
06:00:00 CT
12 Aug 2021

MAR 2022
LBSH2

564.50
06:00:00 CT
12 Aug 2021

MAY 2022
LBSK2

610.00
06:00:00 CT
12 Aug 2021

JUL 2022
LBSN2

595.20
06:00:00 CT
12 Aug 2021

SEP 2022
LBSU2

595.20
06:00:00 CT
12 Aug 2021

 

PPI DATA

When it comes to commodities sold for personal consumption, capital investment, government, and export, the Producer Price Index for final demand is used in the United States to measure price changes. It is composed of six main price indexes: final demand goods (which account for 33% of the total weight), which includes food and energy; final demand trade services (20%); final demand transportation and warehousing services (4%); final demand services less trade, transportation, and warehousing (41%); final demand construction (2%); and overall final demand (which accounts for 2% of the total weight).

 

Producer prices in the United States have increased more than expected.

Manufacturers’ prices for final demand in the United States increased 1 percent from a month earlier in July of 2021, outpacing market expectations of a 0.6 percent increase and following a 1 percent increase in June of 2021.

The increase in services costs, which accounts for nearly three-quarters of the increase in the Producer Price Index, is the largest increase since the data were first calculated in December 2009.
The cost of goods has increased by 0.6 percent this year.

Year Over Year

Compared to a year earlier, producer prices in the United States increased by 7.8 percent in July of 2021, an acceleration from a 7.3 percent increase the previous month and well above the market’s expectations.

Since the start of the current series in November 2010, this is the highest annual rate recorded.

Core Inflation

Production costs in the United States, excluding food and energy, increased 1 percent from a month earlier in July of 2021, the same rate as in June and exceeding market expectations of a 0.5 percent increase.

Inflation Data Released Wednesday

The inflation rate in the United States has remained stable at a 13-year high.

With the consumer price inflation rate remaining unchanged from the previous month’s 13-year high and slightly above market expectations of 5.3 percent, the United States’ consumer price inflation rate in July 2021 was 5.4 percent, reflecting a low base effect caused by the coronavirus crisis, the re-opening of the economy, and continued supply constraints.

Among the major sources of upward pressure were food (3.4 percent, up from 2.4 percent), which was driven by sharp increases in food at home (2.6 percent, up from 0.9 percent), food away from home (4.6 percent, up from 4.2 percent), new vehicles (6.4 percent, up from 5.3 percent), and shelter (6.4 percent, up from 5.3 percent) (2.8 percent vs 2.6 percent).

Energy inflation fell to 23.8 percent from 24.5 percent, used cars and trucks fell to 41.7 percent from 45.2 percent, apparel fell to 4.2 percent from 4.9 cents, transportation services fell to 6.4 percent from 10.4 percent, and medical care services fell to 4.4 cents from 4.8 cents (0.8 percent vs 1.0 percent).

Consumer prices increased by 0.5 percent on a monthly basis in July, the smallest increase since February’s 0.4 percent increase.

Jobs

We are seeing the highest ever levels of job turnovers and quits, as being reported, as Americans have largely changed much about their lives as they live through the pandemic saga. Industries continue to have problems filling positions with skilled employees that will work out in the long term.

Increased turnover rates should be expected through next year as American take jobs out of neccesity they other wise wouldn’t.

According to the Labor Department today, the number of Americans filing new unemployment claims fell for the third consecutive week to 375 thousand in the week ending August 7th, drawing closer to a pandemic low of 368 thousand reached at the end of June and adding to signs of a solid recovery in the US labor market despite the threat of the Delta variant still looming overhead.

Increased threats from a variant do exist though and becoming more evident at the local levels throughout the United States the closer we get to fall. Adding signals of possible interruptions again.

It is expected that the total number of claimants will continue to decline in the coming weeks as more states phase out federal enhanced unemployment benefits ahead of their official September expiration date at the federal level.

The 4-week moving average of initial jobless claims in the United States, which smoothes out week-to-week fluctuations, increased to 396.25 thousand in the week ending August 7th, up from a revised 394.5 thousand in the previous period, according to government data.

With a 0.5 percentage point decrease from June to July of 2021, the unemployment rate in the United States fell to 5.4 percent, the lowest level since March 2020 and below market expectations of 5.7 percent.

The number of unemployed people fell by 782,000 to 8.7 million, a 0.7 percent decrease.

These measures have fallen significantly from their peak levels at the end of the recession that ended in February-April 2020.

However, they continue to be significantly higher than they were prior to the coronavirus pandemic (3.5 percent and 5.7 million, respectively, in February 2020)

The labor force participation rate remained unchanged in July at 61.7 percent, and it has remained within a narrow range of 61.4 percent to 61.7 percent since June 2020, according to the Bureau of Labor Statistics. We will continue to follow re-enter rates verse the unemployment rate.

 

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