Quality Magazine

Industrial Price Index in Positive Territory for Second Straight Week

August 4, 2009

NEWARK, NJ-The Industrial Price Index (IPI), based on the daily prices of raw materials used in industrial production, ended the week of July 31 more than 2.1 percentage points higher than the previous week, reaching 88.2532, the highest point for the IPI since October 17, 2008, reports the Journal of Commerce’s Economic Cycle Research Institute.

The gain marked an 11.9% improvement over the index's average during the previous 52 weeks, the strongest growth the IPI has had since the week ending August 1, 2008, shortly before the onset of a steep decline in world financial markets.

"The continued advance in both the level and the growth rate of the index tells us that the risk of a double-dip recession or an L-shaped recession is much less than feared," says Lakshman Achuthan, managing director of the Economic Cycle Research Institute.

The IPI has fluctuated in the low 80s since early June and moved into positive territory the week ending July 24 by growing 3.3 percentage points to 86.1637. The low point during the economic downturn came the week ending December 19, 2008, when the IPI dipped to 63.8940.

On a year-over-year basis, the index remains far below the 132.2840 recorded a year ago, but the sequential increase suggests growing confidence and competition for raw materials in industrial markets.