Industrial Price Index of Materials on the Rise

Industrial Price Index of Materials on the Rise

The Industrial Price Index of Materials Pricing has been closely monitored by many in the ocean shipping industry and for good reason. Historically, the index has been a reliable source of comparison between economic growth in the US and industrial commodity growth. The demand for the products of the report can be closely compared to cycles in global industrial growth. The index reports price trends of industrial materials, such as crude oil, aluminum, plywood, and fifteen other commodities. Around half of the commodities reported in the index are not traded on exchanges, so they are not changed by speculations. This makes the index a reliable source of comparison when predicting or determining changes in demand.

In January, the Industrial Price Index of Materials Pricing reached a twelve month high. It rose at its fastest rate in a year, thirty-three percent over its weekly average during the past 52 weeks. This indicates that the recent advances in the business cycle are increasing.

The advances can also be expected to continue based on the Economic Cycle Research Institute's Weekly Leading Index. This is a measure of the future of US economic growth. This index rose to its highest rate in thirty-four weeks in the week ending January 14, 2011. The index went from 128.1 in the week prior, to 128.9, the highest that it has been since early in May of 2010. The annualized growth rate increased from 3.6 percent in the week prior to 4.1 percent, also the highest it has been since early May of 2010.

According to the Journal of Commerce, "The Journal of Commerce-Economic Cycle Research Institute (ECRI) index reached 139.0638, up 25.2 percent from a year ago and an increase of 13.2 percent since the week of Nov. 26. The Industrial Price Index (IPI) is published by ECRI, a New York-based independent forecasting group, in association with The Journal of Commerce."

Lakshman Achuthan, cofounder and CEO of the ECRI forecasts a "revival in economic growth that will not be derailed by potential shocks." The ECRI monitors growth and inflation cycles for all major economies, regularly forecasting cycle turns for professional clients, such as ocean shipping companies, ocean freight handlers, international exporters, and many other industries around the world. He predicted the "revival in economic growth" back in November or 2010 based on the index findings.

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