Producer Price Index: The U.S. Bureau of Labor Statistics’ Producer Price Index (PPI) for final demand grew 1.0% in January 2022 (seasonally adjusted), following the 0.4% increase in December. The index for final demand services grew 0.7%, the same as in December while the index for final demand goods moved up by 1.3%. A major factor in the January increase in the index for final demand services was hospital outpatient care prices, which rose 1.6%.

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. January’s 3MMA was 324.37, representing a change of +2.16% month over month (3MMA m/m). The 3MMA is steadily rising again after stalling last September.

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. January’s 3MMA was 238.29, representing a change of +0.74% m/m. Like construction, the 3MMA for manufacturing is steadily rising.

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.