Producer Price Index:  The U.S. Bureau of Labor Statistics’ Producer Price Index (PPI) for final demand grew 0.6% in October 2021 (seasonally adjusted), following the 0.5% increase in September. Prices for final demand services grew 0.2% while the index for final demand goods moved up by 1.2%. One-third of the October advance in the index for final demand goods can be traced to prices for gasoline, which rose 6.7%. Over 80% of the October increase in prices for final demand services can be traced to margins for automobiles and automobile parts retailing, which rose 8.9%.

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. October’s 3MMA was 308.57, representing a change of +0.37% month over month (m/m). We now see the index making gains in 2021 following the price volatility brought on by Covid-19.

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. October’s 3MMA was 231.27, representing a change of +1.43% m/m. Like the construction index, we see steady gains in manufacturing since mid-2020.

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.