Producer Price Index
Producer Price Index: The U.S. Bureau of Labor Statistics’ Producer Price Index (PPI) for final demand decreased 0.1% in February 2023 (seasonally adjusted), following the 0.3% increase in January. The index for final demand goods fell 0.2% in February, while the index for final demand services inched down 0.1%, the same as in January. A major factor in the February decrease in prices for final demand services was margins for machinery and vehicle wholesaling, which fell 3.9 percent.
Figure 1 shows the PPI for materials and components of construction, with the three-month moving average (3MMA) on the left-hand axis and monthly percent change of the 3MMA on the right. February’s 3MMA was 349.32, representing a change of -0.06% month over month (3MMA m/m). The 3MMA has been steadily decreasing since October 2022.
Figure 2 shows the PPI for materials and components of manufacturing, with the 3MMA on the left-hand axis and monthly percent change of the 3MMA on the right. February’s 3MMA was 236.78 representing a change of -0.29% m/m. The 3MMA has been steadily decreasing since August 2022.
At Gerdau, we monitor the PPI – issued monthly by the U.S. Bureau of Labor Statistics – because it is an unbiased, reliable measure of inflation. The PPI can better inform business decisions by providing a framework for contract adjustment, forecasting, inventory valuation, and as an overall economic indicator.