Sawmill Production Declines in Q1

According to the Federal Reserve’s recent release of G.17 data, and additional analysis by the National Association of Home Builders (NAHB), the production index for sawmills and wood preservation industries fell to 91.9 in Q1 (2017=100). This marks the second consecutive decline for the quarterly level: The index fell 4.3% in Q1, following an equal 4.3% decline in the previous quarter. Compared to a year ago, production was 3.8% lower.

The sawmill and wood preservation industry full utilization rates fell marginally for the second straight quarter, from 60.8% to 60.4%. This decline explains part of the production decline for the industry, NAHB said. Additionally, as average plant hours per week in operation fell for these firms, the decline was not due to an increase in production capacity of these firms but rather a decline in output as the plants were in operation for fewer hours.

Notably, employment at these firms has fallen since 2023Q1. The 2023 level of employment stood at 93,130, while by Q1 this level fell to 89,260. Employment among sawmills fell for every quarter of 2023. The Great Recession had a substantial impact on this industry, as employment fell from 105,630 in 2008Q1 to a series low of 80,470 in 2009Q4. Employment rose from this low in 2009 to 91,000 in 2014 and has remained around this level for the last ten years.

According to NAHB, sawmill production capacity increased from 2015 but remains lower than peak levels in 2010. Production by sawmills continues to be higher mainly because the mills are running at higher than historical levels of utilization. Much of the addition in capacity has been recent, as utilization rates have fallen but production continues to run at higher levels.