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Economy in Brief
U.S. Mortgage Applications Continued to Slide Amid Higher Rates
The biggest declines have been in refinancing activity, while applications for purchase are just starting to crack...
UK Inflation Jumps
Inflation is at the highest rate since the series began in January of 1989...
U.S. Industrial Production Much Stronger than Expected in April
The increase in manufacturing output in April was once again led by motor vehicle and parts production...
U.S. Retail Sales Posted Solid Rise in April
Notwithstanding falling real incomes and declining confidence measures, consumer spending posted a solid increase...
U.S. Home Builder Index Took a Steep Drop in May
This is the fifth straight month that builder sentiment has declined...
Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
The Many Links of Inflation Cycle: Hard Landing Is Needed to Crack Them
Peak Inflation & Fed Policy: A Relationship Which Should Worry The Fed And Scare Investors
Why Have the Yields on TIPS Been Negative in the Past Two Years?
"Core" GDP Suggests Economy Gained Momentum in Q1:2022
by Tom Moeller October 22, 2018
The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) declined 1.3% during the last four weeks and extended the decline in prices since the peak four months ago. The decline left the index down 4.1% during the last year. During the last ten years, there has been a 66% correlation between the y/y change in industrial commodity prices and the y/y change in factory sector production.
Recent weakness in commodity prices was led by a 7.6% m/m decline in prices (-13.2% y/y) in the miscellaneous group. Leading the downdraft were framing lumber prices which fell 15.4% m/m. Prices for structural panels declined 10.1% m/m and 20.3% y/y. Natural rubber prices, however, reversed earlier declines with a 2.2% four-week rise (-0.3% y/y). Prices in the textile group dipped again with a 0.3% four-week decline (+1.2% y/y) paced by a 1.9% drop in cotton prices (+13.2% y/y). Burlap prices (used for rope & nets) were little changed (-2.4% y/y).
Metals prices worked 4.4% higher during the last four weeks (-6.5% y/y). The gain was led by zinc prices which increased 12.8% m/m, but fell 18.5% y/y. Steel scrap prices rose 8.1% m/m and by roughly one quarter y/y. Copper scrap prices increased 4.3% m/m but fell 10.4% y/y. The cost of aluminum rose 1.1% m/m although it declined 4.8% y/y. Lead prices improved 0.4% m/m (-18.9% y/y). Also increasing were prices in the crude oil & benzene group by 0.7% m/m and 13.4% y/y. Crude oil prices gained 1.0% during the last four weeks and roughly one-third y/y to an average $70.73 per barrel, the highest price since November 2014. Accompanying the rise in crude oil prices were benzene costs which gained 1.5% m/m (4.5% y/y).
Improvement in prices overall may be coming. The consensus forecast from the National Association for Business Economics (NABE) calls for a 3.8% rise in industrial output during all of 2018 and 2.8% growth in 2019. During the last ten years, there has been a 66% correlation between the y/y change in industrial commodity prices and the y/y change in factory sector output. In addition, factory sector production in the European Union and Japan continues to improve.
Commodity price data can be found in Haver's DAILY, WEEKLY, USECON and CMDTY databases. The NABE forecast is in the SURVEYS database.
FIBER Industrial Materials Price Index (%) | 1-Mth | 3-Mth | 6-Mth | 12-Mth | 2017 | 2016 | 2015 |
---|---|---|---|---|---|---|---|
All Items | -1.3 | -5.4 | -8.3 | -4.1 | 6.7 | 19.2 | -16.3 |
Textiles | -0.3 | -2.0 | -1.4 | 1.2 | 3.0 | 2.8 | 2.2 |
Cotton (cents per pound) | -1.9 | -12.3 | -5.7 | 13.2 | 9.8 | 10.2 | 2.6 |
Metals | 4.4 | -1.3 | -11.9 | -6.5 | 18.6 | 32.9 | -27.8 |
Aluminum ($ per metric ton) | 1.1 | -3.0 | -17.0 | -4.8 | 26.0 | 13.0 | -19.2 |
Copper Scrap (cents per pound) | 4.3 | 2.3 | -9.0 | -10.4 | 29.3 | 17.3 | -27.0 |
Steel Scrap ($ per ton) | 8.1 | -4.2 | -17.3 | 26.7 | 16.8 | 74.5 | -53.8 |
Crude Oil & Benzene | 0.7 | 1.0 | 1.0 | 13.4 | 8.1 | 20.4 | -19.4 |
Crude Oil (WTI, $ per Barrel) | 1.0 | 2.6 | 4.7 | 36.6 | 10.9 | 44.3 | -35.8 |
Miscellaneous | -7.6 | -13.9 | -14.3 | -13.2 | -0.5 | 21.7 | -18.0 |
Framing Lumber ($ per 1000 board ft.) | -15.4 | -29.9 | -24.5 | 15.2 | 20.0 | 12.9 | -16.4 |
Natural Rubber (cents per pound) | 2.2 | 3.0 | -4.9 | -0.3 | -29.6 | 89.4 | -22.5 |