Producer Price Index

The Producer Price index tracks changing domestic prices for wholesale producers of commodities.  More simply stated, the Producer Price index measures price changes in the manufacturing sector.  Unlike the Consumer Price Index, it does not include services.  This price change is given as a percentage change from the previous month.

The Producer Price Index (PPI) is considered a leading indicator of inflation which often gets passed through to the consumer price index (CPI).  An increase in raw material prices may cause manufacturers to raise consumer prices to make up for the price increase of the raw material.  The higher the price the consumer pays, the less they can buy.  If the consumer is buying less product the producers then make less product which, then leads to a lower demand for the raw material.  The decreasing demand for the raw material leads to lower prices for the raw material which eventually leads to lower prices for the consumer.  Then the cycle starts all over again.  Basic economics in action, supply and demand.

More Economic Indicators and Reports:

• Monthly Unemployment Report
• Producer Price Index (PPI)
• Consumer Price Index (CPI)
• Employment Cost Index (ECI)
• Federal Open Market Committee (FOMC)
• Crop Production Report
• Capacity Utilization Report
• Durable Goods Orders Report
• Gross Domestic Product
• GDP Deflators
• Gross National Product
• Consumer Sentiment Report
• Index of Industrial Production
• Average Hourly Earnings
• Index of Leading Indicators (LEI)

Additional Resources:

• When the Economic Reports and Indicators come out and how to use them for futures trading

• Here are some more books on using economic indicators for futures trading

• Links to the websites for the actual Economic Reports and Indicators