Housing Forecast For U.S. Good For Forestry
December 16th, 2011
Telegraph Journal Published Friday December 16th, 2011
Signs of stability in the American housing market is welcomed news for New Brunswick's forestry sector, says David Plante, vice-president of the Canadian Manufacturers and Exporters in New Brunswick and Prince Edward Island.
During a conference call Thursday outlining global economic predictions for 2012, BMO Capital Markets deputy chief economist Douglas Porter said that the housing market in the United States is starting to show signs of settling down.
"In recent months, we have seen some signs of stabilization. I think it would be an overstatement to call it improvement but it does seem like things are started to bounce along the bottom," Porter said. "I think it is probably too early to expect a full start to a recovery next year but we do see home starts rising."
Porter said the housing market saw a modest increase in 2011 but in 2012 they are predicting about a five per cent increase in home starts.
The analysis is good news for New Brunswick because exports to the U.S. represent about 75 per cent of the province's forestry production.
"The fact that this market is stabilizing, if not improving, is certainly good news for the sector, which has been struggling for at least the past seven years," Plante said.
In 2005, Plante said there were 75 pulp and paper saw mills, fibreboard, and wood pellet plants operating in the province. By 2009, only 47 were still open.
"New Brunswick is so closely tied to the United States. Any blip in the American housing market is strongly felt here," Plante said.
Added competition from the B.C. forestry sector is also putting more pressure on the already troubled sector in New Brunswick.
"B.C.'s wood products sector was very heavily dependent on the U.S. for a number of years and then they started expanding into China. But they are finding that the China market is now slowing," Plante said.
Overall, things are starting to look up for the beleaguered forestry sector, which saw an production increase by 17.7 per cent in 2010. It was the first increase since 2004.
Plante said that growth is expected to continue in the sector with a forecast production increase of 13 per cent for 2012, following a one per cent decline in 2011.
"What we are really talking about here is stabilization of the U.S. marketplace. That would be very welcomed news for the province."
