In both of the monthly ISM reports each month, respondents are asked which commodities are rising and falling in price. In this month’s report, we saw a large number of commodities falling in price both for the Manufacturing and Services sector. In the manufacturing sector, respondents noted no commodities rising in price and price declines for nine different commodities. In the services sector, respondents noted increases in the prices of eight commodities and declines in fourteen. On a side note, two commodities were also noted as being in short supply (Labor and Turkey- Happy Thanksgiving!).
On a combined basis, during the month of November respondents noted price increases in eight commodities and declines in 23 for a net of negative fifteen. That is the most negative net reading for a single month since February. The chart below shows the rolling three-month average of the net number of commodities rising in price in the monthly ISM reports. Over time, changes in the net number of commodities rising or falling in price have closely tracked or even preceded moves in overall CPI. At the current level of -13.3, it would appear as though any uptick in headline CPI over the next few months from its currently depressed reading would be unlikely.