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Report
from
North America
New Canada-US border deal
The US president and the Canadian prime minister
recently announced a new border agreement (“Beyond the
Border Action Plan”) that observers say will lead to faster
movement of goods between the two countries by aligning
regulations and speeding up document processing at
border crossings.
The agreement also means that Canada and the US will
share information about travellers entering and exiting the
two countries.
Canada and the US will implement an integrated cargo
security strategy that will clear cargo at its first port of
entry, whether it is in Canada or the US, to reduce expense
and time for businesses.
The goal is to identify security and contraband concerns
with offshore shipments at the ports of entry instead of the
Canada-US border. The new system will be tested in pilots
at major US ports and at the ports in Montreal and Prince
Rupert in Canada.
To expedite border and accounting proceedures, the US’
Importer Self-Assessment and Canada’s Customs Self
Assessment programmes will be aligned as much as
possible. Pilot projects will commence for specific
industry sectors (not wood products) in 2012 to expedite
clearance processes.
Boost to US economy expected from three new trade deals
Recent positive economic data suggests that the US
economy is improving. Unemployment fell by 0.4
percentage points to 8.6% in November, the lowest level
since March 2009. GDP increased at an annual rate of
2.0% in the third quarter of 2011 following a 1.3%
increase in the second quarter.
A further boost to the economy is expected from three new
trade deals that the US Congress approved in October with
Columbia, Panama and South Korea. If the euro zone falls
into recession, however, it will be difficult for the US to
maintain the current pace of growth.
The US trade deficit fell 1.6% to US$43.5 billion in
October, according to the US Department of Commerce.
US imports fell by 1% while exports dropped by 0.8%.
October imports from China (US$37.8 billion) were the
highest on record. Increased consumer spending on the
Thanksgiving weekend in November and the weeks before
Christmas is likely to push imports up again.
Strong Canada GDP growth despite decline in exports
In Canada, GDP increased at an annual rate of 3.5% in the
third quarter of 2011, following a 0.5% increase in the
second quarter, according to Statistics Canada. The fastest
growing economic sectors in the third quarter were
housing investment and crude oil extraction.
Unemployment rose slightly to 7.4% in November after a
considerable drop in October.
Canada’s trade balance went from a surplus of C$1 billion
in September to a deficit of C$885 million in October.
Canada’s trade surplus with the US narrowed as imports
from the US increased to C$24.5 billion, the highest value
since October 2008.
Wood products continue to lead in manufacturing growth
The wood products sector again posted the highest growth
rate of all US manufacturing industries according to the
Institute of Supply Management’s Manufacturing ISM
Report On Business.
The overall manufacturing sector expanded for the 28th
consecutive month in November. Companies are
cautiously optimistic, despite the financial problems in
Europe, because of lower raw material prices and
encouraging new order levels.
The wood products industry also led the manufacturing
sector in terms of growth in new orders and production in
November, based on surveys by the Institute of Supply
Management. The furniture and related products sector
reported paying higher prices for raw materials and
supplies in November.
Furniture retail sales down, building material sales up
Retail sales improved slightly in October according to the
latest US Census Bureau figures. Retail trade sales were
up 0.6% from September, but the increase was mainly
driven by sales of electronics.
Sales at furniture and home furnishing stores declined by
0.7% from September but they remain 3.4% above
October 2010. Building material sales (including
gardening supplies) is up 1.5% from September and 3.4%
from October last year.
Strong increase in new furniture orders
A surprisingly strong increase in new orders for residential
furniture was recorded in September by the Smith Leonard
survey of US manufacturers and distributors. The value of
new orders was up 12% in September compared to the
same month last year and increased by 13% from August
2011. Some of the growth, however, may still be due to
price increases in raw materials and not an increase in
volume. Furniture shipments were up 6% compared to
September 2010.
Residential furniture market outlook to 2013
Residential wood furniture sales are expected to increase
in the second half of 2012 because of modest
improvements in the US housing market and the overall
economy.
The Residential Furniture Economic Forecast reported in
the trade journal Hardwood Review Weekly also forecasts
continuing furniture price increases in the US market
because of global cost increases and a rise in inflation in
China. The price increases affect demand for wood
furniture in particular because of the relatively high cost of
most wood dining room, bedroom and entertainment units
to consumers.
For 2013, the report expects the highest sales of furniture
in recent years. Overall home furnishing sales are forecast
to increase by 6% in 2013. The recent recession reduced
new household formation, and almost 30 million young
adults in the US are living with their parents now.
With lower unemployment the number of new households
will increase significantly, boosting demand for furniture.
The Hardwood Review Weekly is optimistic that the
furniture industry’s sawnwood purchasing is past its
lowest point and will improve in the near future.
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