Following Tuesday’s ISM Manufacturing report, we noted the extremely low reading in the monthly ISM Commodities Survey, which measures the number of commodities rising and falling in price. After today’s report for the Non-Manufacturing sector, that trend remained in place. In this morning’s report, respondents noted price increases in just 6 commodities and decreases in 4. That net reading of +2 is the weakest reading since January. Combining the results of both reports, in August we saw a total of just 8 commodities up in price and 15 lower. That reading of negative 7 was the lowest since February 2016, while the three-month moving average of -4.0 was the lowest since April 2016.
As we noted on Tuesday, low readings in the commodities survey usually track the direction of inflation readings pretty closely and would imply that the current y/y reading of 1.8% in CPI will see downward pressure in the months ahead. For example, in the eight prior months where the three-month moving average in the combined reading was between zero and negative five, the average y/y reading in CPI was +0.45% while the median level was +0.65%. Start a two-week free trial to Bespoke Institutional to access our interactive economic indicators monitor and much more.