Recent improvement in factory production has given support to industrial materials prices. The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) edged 0.1% higher during the last four weeks. Nevertheless, the price index remained down 10.5% y/y and neared the lowest level since June 2016.

Higher prices in the crude oil & benzene category gave the greatest support to the overall price index as crude oil prices improved 8.4% in the last four weeks. Crude oil prices rose to $60.33 per barrel last week. By yesterday, however, prices retreated and remained below the $75.05 October 2018 peak. Prices for the petro-chemical benzene improved 1.1% during the last month (-12.2% y/y). Outside of the petroleum sector, industrial materials prices eased 0.8% in the last four weeks (-17.8% y/y). Prices in the textile group increased 0.8% during the last four weeks as cotton prices surged 6.2%, though they remained roughly one-quarter lower y/y. Burlap prices declined 1.7% in the last four weeks and were off 10.0% y/y. Continuing to work lower were prices in the metals group which fell 1.1% during the last four weeks. Steel scrap prices declined 15.2%, but other metals improved. Zinc prices rose 4.5% in four weeks (-0.5% y/y) and copper scrap costs improved 1.7%. Aluminum prices edged 0.4% higher. Prices in the miscellaneous group continued under pressure and declined 0.8% during the last four weeks. Prices for random lengths of structural panel composite were off 0.9% in four weeks and by one-third y/y. Offsetting this decline was a 6.7% rise in framing lumber prices and a 0.2% improvement in the cost of natural rubber.

Lending support to prices, factory sector output rose 0.5% (-0.5% y/y) during August. Production of durable goods materials increased 0.7% (-0.1% y/y) while nondurable materials output rose 0.4% (-2.7% y/y). Following 4.0% growth last year in overall industrial output, the consensus forecast from the National Association for Business Economics (NABE) calls for a weaker 2.4% rise in industrial production during all of 2019 and a 1.8% gain next year. During the last twenty years, there has been a 56% correlation between the y/y change in industrial materials prices and the y/y change in factory materials output.

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

Collateral Damage: House Prices and Consumption During the Great Recession from the Federal Reserve Bank of Philadelphia can be found here.