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Economy in Brief

FIBER: Industrial Commodity Price Index Touches New High
by Tom Moeller  March 2, 2018

The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) rose 1.4% during the last four weeks (6.8% y/y) as factory sector production around the world continued to improve. The index level was at its highest point since August 2014.

Showing the greatest increase were prices in the miscellaneous group which improved 6.9% last month and 2.9% y/y. Within this group, framing lumber prices increased 8.1% last month and were up by one-quarter y/y. Prices for structural panels increased 12.7% m/m and rose by one-third y/y. Natural rubber costs gained 5.1% last month but still were off by one-third y/y. Prices in the textile group improved 0.2% last month and rose 1.8% y/y. Cotton prices strengthened 3.8% m/m, and by 7.4% y/y. Burlap prices fell 3.7% over the last four weeks, but rose 6.3% y/y. Offsetting these gains were price declines in the metals sector which fell 1.8% during the last month, but improved 17.7% y/y. Weakness was led by a 2.6% one-month decline in aluminum prices. They increased 13.9% y/y. Copper scrap prices eased modestly last month, but gained 17.6% y/y. Steel scrap prices also fell 0.8% during the last four weeks, but rose 27.3% y/y). Amongst other metals, lead prices fell 3.5% during the last month, up 12.2% y/y. Zinc prices fell 1.6% during the last four weeks and rose 24.3% y/y. Also easing were prices in the crude oil & benzene group by 2.1% last month (+5.0% y/y). Weakness was led by a 4.3% m/m decline in crude oil prices (+16.6% y/y) to an average $62.57 per barrel, compared to $65.36 at the start of February. Prices declined to $60.99 yesterday. Benzene prices fell 2.5% in the last four weeks and by 4.4% y/y.

Further price improvement may be coming. The current industrial output consensus from the National Association for Business Economics (NABE) calls for a 2.3% rise in 2018. During the last ten years, there has been a 52% correlation between the three-month change in prices and the change in U.S. industrial output. In addition, factory sector production in the European Union and Japan continues to improve.

Commodity price data can be found in Haver's DAILY, WEEKLY, USECON and CMDTY databases. The NABE forecast is in the SURVEYS database.

Monetary Policy Cycles and Financial Stability from the Federal Reserve Bank of San Francisco can be found here.

FIBER Industrial Materials Price Index (%) 1-Mth 3-Mth 6-Mth 12-Mth 2017 2016 2015
All Items 1.4 6.3 6.9 6.8 6.7 19.2 -16.3
 Textiles 0.2 1.9 2.5 1.8 3.0 2.8 2.2
  Cotton (cents per pound) 3.8 12.0 13.8 7.4 9.8 10.2 2.6
 Metals -1.8 8.5 7.5 17.7 18.6 32.9 -27.8
  Aluminum ($ per metric ton) -2.6 4.5 3.9 13.9 26.0 13.0 -19.2
  Copper Scrap (cents per pound) -0.8 2.5 3.7 17.6 29.3 17.3 -27.0
  Steel Scrap ($ per ton) -0.8 23.2 13.0 27.3 16.8 74.5 -53.8
 Crude Oil & Benzene -2.1 1.1 16.1 5.0 8.1 20.4 -19.4
  Crude Oil (WTI, $ per Barrel) -4.3 8.1 34.0 16.6 10.9 44.3 -35.8
 Miscellaneous 6.9 10.7 6.2 2.9 -0.5 21.7 -18.0
  Framing Lumber ($ per 1000 board ft.) 8.1 16.2 25.7 24.1 20.0 12.9 -16.4
  Natural Rubber (cents per pound) 5.1 12.5 -5.1 -32.1 -29.6 89.4 -22.5
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