March 2014 International Trade (Softwood Lumber)

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Softwood lumber exports increased by 4 MMBF (2.5 percent) in March while imports jumped by 150 MMBF (17.5 percent). Exports were 22 MMBF (16.0 percent) above year-earlier levels; imports were 15 MMBF (1.4 percent) lower. 

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Asia (especially China and Japan) retained the “top spot” for U.S. softwood lumber exports in March. China was also the largest single-country destination by a wide margin; year to date (YTD), exports to China were up nearly 73 percent relative to the same period in 2013. Meanwhile, Canada was the overwhelming source of softwood lumber imports into the United States. Imports from Germany, Honduras, and Latvia increased markedly. Imports from Austria and Sweden have nearly dried up. 

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Just under half of U.S. softwood lumber exports left the country through West Coast (primarily Seattle, WA) customs districts in March. At the same time, Great Lakes customs districts (especially Duluth, MN) handled over two-thirds of the softwood lumber imports coming into the United States. 

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Douglas-fir comprised 23.0 percent of all softwood lumber exports in March, followed by Southern yellow pine with 21.1 percent.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

March 2014 International Trade (General)

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Total March exports of $193.9 billion and imports of $234.3 billion resulted in a goods and services deficit of $40.4 billion, down from $41.9 billion in February. March exports were $3.9 billion more than February exports of $190.0 billion. March imports were $2.5 billion more than February imports of $231.8 billion.

In March, the goods deficit decreased $0.6 billion from February to $60.7 billion, and the services surplus increased $0.9 billion from February to $20.4 billion. Exports of goods increased $3.7 billion to $135.1 billion, and imports of goods increased $3.1 billion to $195.8 billion. Exports of services increased $0.2 billion to $58.8 billion, and imports of services decreased $0.7 billion to $38.4 billion.

The goods and services deficit increased $3.8 billion from March 2013 to March 2014. Exports were up $9.2 billion, or 5.0 percent, and imports were up $13.0 billion, or 5.9 percent.

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On a global scale, data compiled by the Netherlands Bureau for Economic Policy Analysis showed that world trade volume decreased by 0.7 percent in February while prices rose by 0.3 percent.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

April 2014 Monthly Average Crude Oil Price

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The monthly average U.S.-dollar price of West Texas Intermediate (WTI) crude oil rose modestly in April, up $1.50 to $102.31 per barrel. That price rise coincided with a slightly weaker U.S. dollar, which was sufficient to offset the lagged impacts of an uptick in the amount of oil supplied -- 73,000 barrels per day (BPD), to 19.0 million BPD -- in February and continued accumulation of crude stocks. The monthly average price spread between Brent crude (the predominant grade used in Europe) and WTI narrowed by $1.28 in April, to $5.40 per barrel.

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Oil futures were falling as our data-collection period came to an end, as according to ASPO-USA, “ever-growing US crude stockpiles balanced off an ever-deteriorating Ukrainian situation.” 

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The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

April 2014 Currency Exchange Rates

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In April the monthly average value of the U.S. dollar appreciated relative to two of the three major currencies we track: 0.1 percent against both the euro and yen; the greenback depreciated 1.0 percent against Canada’s loonie. On a trade-weighted index basis, the dollar weakened by 0.4 percent against a basket of 26 currencies. 

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The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

April 2014 ISM Reports

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According to the Institute for Supply Management’s (ISM) monthly opinion survey, expansion of economic activity in the U.S. manufacturing sector expanded again in April. The PMI registered 54.9 percent, an increase of 1.2 percentage points from March's 53.7 percent (50 percent is the breakpoint between contraction and expansion). ISM’s manufacturing survey represents under 10 percent of U.S. employment and about 20 percent of the overall economy. Continued growth in the export and import sub-indices were the main sources of support for the idea of improving conditions.

“Comments from the [respondent] panel generally remain positive,” said Bradley Holcomb, chair of ISM’s Manufacturing Business Survey Committee; “however, some expressed concern about international economic and political issues potentially impacting demand.”

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Wood Products expanded in April, thanks to gains in employment. Paper Products grew, with widespread support among the sub-indices.

The non-manufacturing sector, which accounts for 80 percent of the economy and 90 percent of employment, picked up the pace of expansion in April. The NMI registered 55.2 percent, 2.1 percentage points higher than March’s 53.1 percent. Two sub-indexes in the NMI – the Business Activity Index (“Overall activity” in the table below) and the New Orders Index – have good correlations to the economy; both grew faster.

“The majority of survey respondents' comments indicate that both business conditions and the economy are improving,” said Anthony Nieves, chair of ISM’s Non-Manufacturing Business Survey Committee.

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All three of the individual service industries we track expanded in April, with near-universal improvement in employment and orders (whether new, backlogged and import/export).

Commodities up in price included lumber, building materials, wood pallets, diesel and gasoline, copier paper, paper products, and natural gas. Commodities down in price included spruce studs. No relevant commodities were in short supply.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

March 2014 Manufacturers’ Shipments, Inventories, and New & Unfilled Orders

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According to the U.S. Census Bureau, the value of manufactured-goods shipments increased $1.4 billion or 0.3 percent to $494.9 billion in March. This was at the highest level since the series was first published on a NAICS basis in 1992 and followed a 0.9 percent February increase. Shipments of durable goods increased $2.8 billion or 1.2 percent to $237.1 billion, led by transportation equipment. Meanwhile, nondurable goods shipments decreased $1.4 billion or 0.6 percent to $257.9 billion, led by petroleum and coal products. Wood shipments rose by 1.1 percent while Paper shipments slipped by -0.1 percent.

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Inventories increased $0.6 billion or 0.1 percent to $643.1 billion (the highest level since the series was first published on a NAICS basis). The inventories-to-shipments ratio was 1.30, unchanged from February.

Inventories of durable goods increased $1.2 billion or 0.3 percent to $393.3 billion, led by transportation equipment. Nondurable goods inventories decreased $0.6 billion or 0.2 percent to $249.7 billion, led by petroleum and coal products. Wood inventories rose by 0.6 percent, while Paper followed behind with a 0.4 percent increase. 

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New orders increased $5.3 billion or 1.1 percent to $493.9 billion; excluding transportation, new orders increased 0.6 percent. Durable goods orders increased $6.7 billion or 2.9 percent to $236.0 billion, led by transportation equipment. New orders for nondurable goods decreased $1.4 billion or 0.6 percent to $257.9 billion.

As can be seen in the graph above, real (inflation-adjusted) new orders have been essentially flat since early 2012, and have recouped a little more than two-thirds the losses incurred since the beginning of the Great Recession. 

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Unfilled durable-goods orders increased $6.9 billion or 0.6 percent to a new nominal high of $1,069.3 billion, led by transportation equipment. The unfilled orders-to-shipments ratio was 6.44, down from 6.49 in February. Real unfilled orders, a good litmus test for sector growth, show a much different picture; in real terms, unfilled orders have regained less than 70 percent of the ground given up during the Great Recession.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

March 2014 U.S. Construction Spending

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Overall construction spending in the United States increased by 0.2 percent during March, to a seasonally adjusted and annualized rate (SAAR) of $942.5 billion -- the highest level since March 2009. The increase derived primarily from a $2.8 billion (0.8 percent) rise in private residential spending. Private non-residential spending ticked up by $0.5 billion (0.2 percent) while the public construction component fell by $1.6 billion (0.6 percent).

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Click here for a discussion of March’s new residential permits, starts and completions. Click here for a discussion of new and existing home sales, inventory and prices.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.