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Lumber crash leads to 'blowout' sales as prices crater – CBC.ca

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Homeowners who resisted the urge to renovate during the first 18 months of the pandemic may find now is their chance, as lumber prices that soared to dizzying heights in the spring have crashed back down to earth.

At family-run Peacock Lumber in Oshawa, Ont., owner Glen Peacock said retail prices have “collapsed” in recent weeks. An eight-foot-long, two-by-four inch piece of framing lumber that cost $12.65 on June 1 is now selling for $3.95, Peacock said — basically what it would have sold for before the boom.

“It was amazing it went as long as it did before people said, ‘This is too much money,’ ” Peacock said. “People who waited, if they could, to do their projects are going to be in a much better position.”

A pandemic-driven surge in home renovations and do-it-yourself projects sent shock waves through the home improvement and construction industries earlier this year. North American lumber prices hit record highs of more than $1,600 US per thousand board feet in May — three times higher than pre-pandemic levels.

The price roller-coaster had customers pre-ordering lumber months in advance to ensure supply and even resulted in a spate of opportunistic thefts from construction sites across North America.

But the ride has come back down even faster than it went up — and that means many retailers have been stuck trying to get rid of product they purchased at higher prices.

Many lumber yards have drastically cut back on production until the backlog of unsold wood moves. (Robert Short/CBC)

“With lumber prices falling as fast as they did, it forced everybody to sell their overpriced inventory at a loss,” said Joel Seibert, owner of Mountain View Building Materials just outside of Calgary. “What would have been the ideal situation would be for the price to take twice as long to come back down as it did to go up.”

Liz Kovach — president of the Western Retail Lumber Association, which represents retail lumber, building supply and hardware stores in Western Canada — said the pandemic price bubble burst with the arrival of summer. Warmer weather and the easing of COVID-19 restrictions across the country resulted in Canadians travelling more and spending less time on projects around the house, she said.

Retailers slashing prices

“It’s been a challenge on the retail side,” Kovach said. “We’ve seen a lot of blowout price sales, just so that they can move the materials.”

The plunging prices have already led to curtailments and reduced operations at sawmills. Vancouver-based Canfor Corp. said at the end of August that it will run all of its B.C. sawmills at 80 per cent capacity until market conditions improve. Conifex Timber Inc., also based in Vancouver, announced Aug. 20 that it would curtail lumber production at its Mackenzie, B.C., sawmill for a two-week period.

The rapid rise in lumber costs earlier this year added “tens of thousands of dollars per home” to new home construction costs, said Kevin Lee, chief executive of the Canadian Home Builders’ Association. And while consumers may already be benefiting from lower prices at home improvement stores, homebuyers signing new construction purchase contracts are still seeing elevated prices.

WATCH | High lumber prices were adding up to $30K to the price of a new home:

Price of lumber skyrockets after pandemic disrupts supply chain

6 months ago

The pandemic has disrupted supply chains so much that the price of lumber has gone through the roof. 1:58

“Builders still have to clear their inventories of having purchased higher-priced lumber. It takes a while to clear the system,” Lee said. “Yes, lumber prices from the mills came down dramatically over the summer, but that’s unfortunately taken a while to reach the rest of the industry and consumers.”

Lee said when it comes to new home construction, pricing is being complicated by ongoing pandemic-related supply chain challenges. While difficulties related to lumber have eased, home builders are still dealing with delivery delays and price inflation on everything from plumbing and electrical products to kitchen cabinetry.

“It doesn’t compare to the three to five times price increases we saw with lumber, but I’d say on average, we’re seeing 10 per cent increases on everything, including the kitchen sink,” Lee said. “And we are still seeing delays on closings, just because of an inability to get products and materials.”

In a note to clients earlier this week, RBC Dominion Securities analyst Paul Quinn said with the arrival of fall, lumber markets are already beginning to tick slightly higher. Home centres are noticing increased traffic as customers try to finish projects before winter, Quinn said, and retail demand tends to be a leading indicator for lumber pricing.

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Gold prices remain down but making a move back to $1800 as ISM manufacturing PMI falls to 53 – Kitco NEWS

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(Kitco News) – The gold market continues to push back towards $1,800 an ounce as the U.S. manufacturing sector sees weaker than expected growth in June, the Institute for Supply Management (ISM).

Friday, the ISM said that its manufacturing Purchasing Managers Index dropped to a reading of 53%, down from May’s reading of 56.1. The data missed expectations as economists were looking for a decline to 54.6%.

The report said this is the lowest PMI reading since June 2020.

““The U.S. manufacturing sector continues to be powered — though less so in June — by demand while held back by supply chain constraints,” said Timothy Fiore, Chair of the ISM Manufacturing Business Survey Committee, in the report.

The gold market has been seeing solid technical selling pressure after falling through $1,800 an ounce in overnight action; however, the disappointing economic data from the U.S. is helping the precious metal retrace some of its losses. August gold futures last traded at $1,795.70 an ounce, down 0.64% on the day.

Looking at some of the components of the index, the report said that the New Orders Index dropped to 49.2%, down from the previous level of 55.1%. At the same time, the Production Index increased o a reading of 54.9%, down from May’s reading of 54.2%.

The report also highlighted a further contraction in in the labor market. The Employment Index dropped to a reading of 47.3%, down from May’s reading of 49.6%.

It’s not just manufacturing that is losing momentum. The report highlighted a drop in inflation pressures, which could be seen as a negative for gold. The report said that the Prices Index fell to 78.5%, down from May’s reading of 82.2%.

Although the latest disappointing economic data raises the risk that the U.S. economy falls into a recession; however, Andrew Hunter, Senior U.S. Economist at Capital Economics, said that the U.S. economy has room to slow without triggering a recession.

“While the ISM index lends support to concerns that aggressive Fed tightening will drive a sharp slowdown in the economy, the details suggest that slowdown could result in a faster drop-back in inflation than many are now assuming,” he said.

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Canada's economy slows unexpectedly in May after April growth – The Globe and Mail

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Canada’s economy slowed unexpectedly in May, according to preliminary data from Statistics Canada, but economists don’t expect this to deter the Bank of Canada from pushing ahead with an oversized interest rate hike in July to try to tame inflation.

Data published by Statscan on Thursday estimate Canada’s gross domestic product fell 0.2 per cent month over month in May, with output declines in mining, energy, manufacturing and construction sectors. That follows a solid 0.3-per-cent GDP gain in April. The preliminary May estimate will be finalized next month.

“The projected decline in May is both surprising and concerning,” wrote Andrew Kelvin, the chief Canada strategist at TD Securities, in a note to clients. “Q2 growth is still on solid footing overall, but if the slowdown in May lingers into June it will raise fears that the economy is slowing sooner than anticipated.”

Despite the drop, most Bay Street economists expect the central bank to proceed with a 0.75-percentage-point interest rate hike on July 13. Inflation hit a 39-year high of 7.7 per cent in May, and the bank has said it is prepared to act aggressively to bring it back down, even if that means significantly tamping down economic growth. Higher interest rates are designed to cool demand to bring it back in line with the economy’s supply capacity.

“Despite the surprise decline in May’s advance GDP the economy is still running firmly above long-run capacity limits, evident by decade-low unemployment rates. And inflation remains uncomfortably high at levels well above central bank’s target,” wrote Claire Fan, an economist with Royal Bank of Canada, in a note to clients.

“We expect growth to slow more significantly as the year progresses as high inflation and rising borrowing costs [bite] more into households’ spending power.”

The economy grew at a respectable clip in April, led by a 3.3-per-cent surge in mining and oil and gas output. Oil sands extraction grew 5.6 per cent that month, the largest monthly increase since September, 2020.

High-contact services also continued to gain ground with the lifting of pandemic restrictions. Air transportation jumped 20 per cent in April, while the accommodation and food services sector expanded 4.6 per cent. Arts, entertainment and recreation activity increased 7 per cent, with an assist from sports fans.

“The Toronto Raptors qualified for the NBA playoffs this year, playing late into April in their home arena in front of full crowds for the first time since winning a championship in 2019. Additionally, a number of minor hockey leagues extended their seasons into April to complete postponed games due to lockdown-related restrictions earlier in the year,” Statscan noted.

At the same time, higher borrowing costs are rapidly becoming a drag on the housing market. Real estate activity contracted 0.8 per cent in April, the largest monthly decline in two years. Activity at the offices of real estate agents and brokers fell 15 per cent that month. This followed Bank of Canada interest-rate hikes in March and April, as well as a sharp repricing in bond markets, which has pushed mortgage rates higher in recent months.

The preliminary data for May shows a retrenchment in energy, mining and manufacturing activity. Stephen Brown, the senior Canada economist with Capital Economics, suggested this dip may be short-lived.

“Amid elevated commodity prices and cuts to supply elsewhere, we would be surprised if activity in the mining, oil and gas sector failed to bounce back in June. Likewise, as there are now signs that global product shortages are easing, manufacturing activity should also rebound over the coming months,” he wrote in a note to clients.

Thursday’s data put the Canadian economy on track to grow about 4 per cent on an annualized basis in the second quarter. That’s below the central bank’s most recent estimate but above many other advanced economies, which are feeling the pinch of higher commodity prices and supply chain disruptions caused by the war in Ukraine more acutely.

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Pandemic travel: How Canadian airlines are reducing flights – CTV News

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Two of Canada’s largest airlines announced steps to cope with delays, cancellations and service issues.

On Wednesday night, Air Canada said it would be making adjustments to flights over the next two months in order to address “customer service shortfalls.” And on Thursday, WestJet reaffirmed its taking a “very measured” strategy in order to maintain services this summer.

Here’s what the two airlines have announced.

AIR CANADA

Air Canada sent an email to customers on Wednesday night announcing a reduction in flights the airline will be offering in July and August.

In an emailed statement to CTV News Channel, an Air Canada spokesperson said the company will be reducing its schedule by an average of 154 flights per day for July and August. Before this, Air Canada said it was operating around 1,000 flights per day.

The company said the routes most affected are flights to and from hubs in Toronto and Montreal. Air Canada will be reducing the frequency of these flights over the summer, primarily affecting evening and late-night flights on the airline’s smaller aircraft.

Air Canada is also suspending three routes this summer. The spokesperson said the airline will temporarily suspend routes between Montreal and Pittsburgh, Baltimore and Kelowna, and Toronto and Fort McMurray.

International flights will remain mostly unaffected, except for timing changes that the spokesperson said would reduce flying at peak times and improve the flow of passengers to these destinations.

While Air Canada President Michael Rousseau acknowledged in the email to customers this will have a “negative impact” on some passengers, he said he hopes giving this notice will allow travellers to make other arrangements for their summer travel plans.

WESTJET

In a statement posted on its website on Thursday, WestJet said it would also be operating fewer flights in order to ensure the company “can deliver a stable operation.”

WestJet says it will be operating 25 per cent fewer flights this summer, dropping its services from an average of 700 flights per day to an average of 530 flights per day.

The statement from the airline also says the company is conducting “extensive planning” to ensure its flights are “all flying in peak performance.” 

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Tell us what you’d like to know when it comes to rules around entering or leaving Canada.

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