The second quarter brought few smiles to lumber manufacturers and timber harvesters as weak lumber pricing and a lagging housing industry continued to take their toll. Of the major companies that report financial results, only one improved its earnings for the April-June period.

"The U.S. economy remains in an unsettled state that requires companies to be extremely agile to respond to wide swings in demand," said Louisiana-Pacific Corp. CEO Rick Frost in comments on LP's financial report–comments that many other executives echoed in their own earnings announcements. "For housing, there is growing agreement that the timing and strength of the recovery will be determined by the change in the inventory of vacant homes for sale and household formations enabled by job recovery."

While lack of residential construction activity did major harm to those in the lumber manufacturing industry, offshore demand for logs and lumber provided some cushion.

"Offshore markets remained strong," said Canfor in a statement with its quarterly results. "In China, the concrete forming, remanufacture and wood frame construction sectors continued to increase their consumption of [British Columbia] lumber." Canfor suffered an 18.9% decline in net earnings, to finish at C$26.2 million (US$27 million). It was among the lowest declines seen. The company also recorded a 2.5% decline in sales.

Among the companies covered, West Fraser Timber took the biggest hit with an 85% decline in net earnings, while Ainsworth saw sales plummet 24.4%. Five companies reported operating income swung into the red, while two more remained in the red.

Companies are not optimistic about the remainder of 2011 and beyond, and it's all tied to residential construction activity.

"For the remainder of 2011, we expect the demand for residential construction to remain depressed as excess housing inventory levels, a weak labor market, competition from distressed home sales, and restrictive lending conditions for both home buyers and builders persist," Boise Cascade predicted.