In each month’s ISM reports on the Manufacturing and Non-Manufacturing sectors, respondents are asked whether prices for commodities they deal with are up or down. Over time, we have found that trends in the number of commodities rising in price has tended to coincide with, or even lead, trends in inflation. In this month’s report on the Non-Manufacturing sector (released on 9/6), respondents noted increases in the prices of 16 commodities and declines in 6, for a net reading of +10, which was up from +6 last month and slightly above the six-month average of 8.2. In the Manufacturing sector (released on 9/1), the commodities survey showed increases in the prices of 9 commodities and declines in 7, for a net reading of +2. That was down from +8 last month and is significantly below the six-month average of +9.8.
The chart below compares the combined net number of commodities rising in price (on a three-month moving average basis) to the y/y change in CPI. As shown in the chart, changes in the commodities survey have closely tracked or even led CPI over time. Two months ago, the net reading of the commodities survey hit a multi-year high, but has since declined for two straight months. As shown on the right-hand portion of the chart, that coincides with a short-term peak in the CPI earlier this year.