• Factory sector growth has helped raise prices.

• Commodity price strength is broad-based.

Growth in factory sector output has been a mainstay of the economy's recovery. During the last six months, industrial production has risen by 19.1%. At the same time, the Industrial Materials Price Index, from the Foundation for International Business and Economic Research (FIBER), has increased by roughly one-quarter.

Price strength in the metals group is leading the price increase with a 30.0% six-month rise and 11.1% during the last four weeks. Steel scrap prices have jumped 49.4% in six months and zinc prices have risen 37.9% during that period. The price of copper scrap is up by roughly one-third since April while aluminum prices have gained 27.6% in six months. Lead prices are close behind with an 18.8% six-month rise.

Prices in the crude oil & benzene group are up 23.3% during the last six months and 12.3% during the last four weeks. Prices of the petro-chemical benzene more than doubled in the last six months. A 21.0% half-year rise in crude oil prices to $46.08 per barrel accompanied the increase. Excluding crude oil, industrial commodity prices have risen 22.4% in six months and 6.9% in the last four weeks.

These price gains have been accompanied by a roughly one-third price rise in the miscellaneous group during the last six months. Framing lumber costs more than doubled during the period. This increase was accompanied by a 55.2% half-year rise in natural rubber prices. Plywood prices have been unchanged since December 2019.

Prices in the textile group prices have improved 4.3% in the last six months as cotton prices rose 21.5%. The cost of burlap, used for sacks, bags and gardening improved 11.5% in six months and 4.7% in the last month alone.

Continued recovery in industrial output will help support commodity prices. Forecasts from the National Association for Business Economics call for a 3.4% four-quarter rise in real GDP in 2021, following a 2.6% decline this year.

The Foundation for International Business and Economic Research (FIBER) develops economic measurement techniques as applied to business cycles and inflation in the U.S. and other market economies. The commodity price data can be found in Haver's DAILY, WEEKLY, USECON and CMDTY databases.