Producer Price Index: The U.S. Bureau of Labor Statistics’ Producer Price Index (PPI) for final demand decreased 0.3% in May 2023 (seasonally adjusted), following the 0.2% increase in April. The index for final demand goods fell 1.6% in May, the largest decrease since falling 1.6 percent in July 2022, while the index for final demand services moved up 0.2%. Sixty percent of the May decline in the index for final demand goods can be traced to a 13.8 percent drop in prices for gasoline.

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. May’s 3MMA was 350.63, representing a change of +0.13% month over month (3MMA m/m). The 3MMA has been steadily increasing since March.

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. May’s 3MMA was 236.20 representing a change of -0.13% 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.