We wrote yesterday of the almost 50 percent increase in lumber prices since mid-June and how it bodes well for the U.S. labor market. We’ve constructed a cleaner chart to show how nonfarm employment moves with lumber.
Though prices are not driven solely by macro factors, which is illustrated by the noise and volatility of the price series, they do peak and trough with employment during periods of depressed economic activity. While the employment data is only observed with a long lag, lumber prices are viewed in real time and can be used as a signal of future trends. As a leading indicator for housing as well as the economy, the sharp rebound in lumber prices from the June lows is another hopeful sign the employment situation may be about to improve. Stay tuned!
Global Macro Monitor 
