Producer Price Index: The U.S. Bureau of Labor Statistics’ Producer Price Index (PPI) for final demand increased 0.3% in July 2023 (seasonally adjusted), after remaining flat in June. The index for final demand goods edged up 0.1% in July, after no change in June, while the index for final demand services increased 0.5%, the largest rise since August 2022. Forty percent of the July advance in the index for final demand services can be traced to a 7.6-percent rise in prices for portfolio management.

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. July’s 3MMA was 350.76, representing a change of +0.01% 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. July’s 3MMA was 234.54 representing a change of -0.61% 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.