In January 2024, the U.S. Bureau of Labor Statistics reported a 0.3% increase in the Producer Price Index (PPI) for final demand, on a seasonally adjusted basis, signaling a modest uptick in the prices producers receive for their goods and services. This follows a slight decline of 0.1% in December 2023 and a 0.1% increase in November. Over the 12 months ending in January 2024, the unadjusted final demand index rose by 0.9%, reflecting a gradual upward trend in the broader economic landscape.
The lumber market, particularly the softwood lumber sector, faced significant challenges, with a notable year-over-year decline of 9.0% and a month-to-month decrease of 1.8%. This downturn is primarily attributed to cooling demand in the housing sector, driven by elevated mortgage rates that have dampened homebuying activity. High mortgage rates have led to reduced affordability, curtailing the demand for new construction and subsequently for construction-related materials such as softwood lumber.
Contrastingly, hardwood lumber showed a slight month-to-month recovery with a 0.1% increase, despite a 2.7% year-over-year decline.
The millwork products experienced a minor year-over-year decrease of 3.1%, with a marginal month-to-month reduction of 0.1%. Plywood, essential in construction and furniture making, also witnessed a year-over-year decline of 2.6%, with little change on a month-to-month basis.
The paper sector displayed mixed results; paper saw a slight year-over-year decrease of 0.2% but a 0.5% increase from December to January, potentially pointing to steady or slightly improving demand in specific segments like printing and writing. However, paperboard faced a more pronounced year-over-year challenge, declining by 7.7% and month-to-month by 0.4%, likely due to evolving packaging needs or greater material efficiency. Paper boxes and containers also saw a year-over-year decrease of 4.0% and a month-to-month drop of 0.5%.
