In each month’s ISM report, respondents are asked which commodities have risen in price and which have declined. Looking at the results of this part of the report helps to show whether any price moves are narrow and specific to a particular sector or broad based across different industries. The more broad the results, the more likely it is that the price increases or decreases will filter into official inflation measures. As shown in the charts below, trends in the number of commodities rising/falling in price tend to track changes in the CPI. More specifically, in the last several months we have consistently seen the number of commodities falling in price exceed the number of commodities rising in price and that has been followed by declines in year/year readings of the Consumer Price Index.
In this month’s ISM Manufacturing report we saw a continuation of this trend as just five commodities were reported as being up in price while thirteen declined (left chart). While more commodities were down in price than up in price, the three month moving average of the net number of commodities rising in price actually rose slightly (-16.0 to -14.3). For the services sector (right chart), we not only saw an increase in the three month moving average, but we actually saw more commodities rise in price (11) during the month of March than fall (10), which was a first for 2015.
The chart below shows the number of commodities rising and falling in price on a combined basis by taking the readings from both the Manufacturing and Non Manufacturing reports. In this month’s commodities surveys, there were a total of 16 commodities up in price and 23 down for a net reading of negative seven. That brought the three month moving average up slightly from -20 (lowest reading since the Financial Crisis) to -17.33. While only a small increase, we would note that it is the first time the three month moving average has increased since last April and is an early indication that downward pressure on prices may be abating.