Winter weather conditions this year have been milder than last year across most regions of the province, making it a challenge for logging operations. Some noted with the colder January weather hitting mid-month, it made harvesting easier as ground conditions improved. Sawmill operators commented it was still a challenge getting log decks up to levels they wanted, however it had improved slightly to boost output, which was more than at year’s end 2020. Manufacturers, wholesalers and secondary manufacturers welcomed the extra mill production.
The province issued a stay at home order on January 12, 2021 requiring residents to remain in their homes except for essential trips to grocery stores, to access health care, or to commute to essential jobs. The order, designed to protect Ontario’s health care system, followed a province-wide lockdown that had started on December 26th. The province ordered non-essential construction to stop, and all businesses are required to ensure that all employees able to work from home do so. The province shifted its definition of essential construction, meaning many job sites were allowed to remain open.
With the U.S. housing market still strong, demand for Hardwood finished goods continues to rise. The demand is also fueled by the improved global economy. Sales to solid wood flooring producers, cabinet manufacturers, mouldings and millwork, and truck trailer companies are strong, commented contacts.
With the Chinese New Year celebrations, export sales saw the usual slowdown. While green lumber production is edging up, kiln-dried inventories are low, stated some buyers. The wooden pallet industry is performing well, but railroad tie activity is controlled, commented some contacts.
With the decimation of Ash by the Emerald Ash Borer in the U.S. demand and production there is not consistent. The volume of live trees in that country is greatly diminished, causing some sawmills to no longer handle this species. Contacts noted that domestic and international markets are absorbing developing supplies. However, supplies are not meeting buyers’ needs for many grades and thicknesses. Prices were noted as having risen for both kiln-dried and green lumber supplies.
With the slight improvement of log decks for many species, most sawmill operators focused on processing higher valued species such as Hard and Soft Maple, Red and White Oak. This made green Basswood availability rather low. Supplies of the common grades were sufficient to meet demand. But, demand for upper grades was solid and thus supply strains were felt. Prices have increased for this species, and circumstances were similar for kiln dried stocks.
With the renovation and home construction sectors improving, Birch demand has done very well. Production for this species has not been high, leaving secondary manufacturers wanting more materials. Birch prices
have also risen as a result.
As for other species, the improved housing and renovation markets are key to demand for Hard Maple, which was noted as robust. Sawmill volumes have increased for this species, with buyers stating that Hard Maple supplies would likely increase more heading into early spring.
Soft Maple demand is also solid for most grades and thicknesses. Sawmills are producing more Soft Maple, with supplies edging up. Kiln dried inventories are low relative to buyers’ needs, though. The quick and strong rebound in housing activity has given a boost to Soft Maple demand.
The Bank of Canada’s quarterly survey on consumer expectations showed that respondents believed they were less likely to find a new job if they lost their current one. The Bank of Canada officials wrote that people appear unwilling to change jobs until the COVID-19 situation normalizes. That means less “moving up” between jobs that the bank warned could weigh on future wage growth and lead to lower productivity that would impact the economy overall. The survey of consumer expectations was conducted during November just as COVID-19 case counts started to rise nationally, but before lockdowns in some provinces.
Asked whether new restrictions would be better or worse economically, three-quarters of respondents in the survey said they expected lockdowns now to have a similar or slightly smaller impact on their hours worked, earnings and spending.
“Most respondents do not expect the threat from COVID-19 to diminish before the second half of 2021,” the report said.
The bank’s quarterly business outlook survey, also released the same day as the quarterly survey on consumer expectations, suggested business sentiment improved in line with news about vaccines.
However, the bank said most businesses don’t expect the positive impacts of vaccinations to materialize until later this year. Nor are the impacts going to be widespread. The business outlook survey noted that one-third of companies polled didn’t expect their sales to return to pre-pandemic levels in the next 12 months.
The Bank kept its key interest rate on hold at 0.25 percent on January 20th, citing near-term weakness and the “protracted nature of the recovery” in its reasoning. The economy will go in reverse for the first quarter of 2021, the Bank said, warning the hardest-hit workers will be hammered again on a path to a recovery that rests on the rollout of vaccines.
With the rollout of the vaccine sooner than they had expected, it will give way to a brighter outlook for the medium-term. Still, the Bank said in its updated economic outlook, a full recovery from COVID-19 will take some time. It doesn’t see inflation returning to its two percent target until 2023, one year longer than previously forecast, and the Bank’s key rate is likely to stay low until then.
Overall, there is reason to be more optimistic about the economy in the medium-term, but it will still need extraordinary help from governments and the central Bank to get there, Bank Governor Tiff Macklem said. The Bank’s look ahead rests on efforts to vaccinate Canadians by the end of the year without hiccups in that timeline, which would mean broad immunity six months sooner than theBank previously assumed.
