Joseph Bonney | Jan 26, 2011 8:17AM EST
The widely watched Industrial Price Index of materials pricing hit a 12-month high last week and rose at the fastest rate in a year, a sign the business cycle’s upswing is gaining momentum.
The Journal of Commerce-Economic Cycle Research Institute 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.
In another sign of accelerating growth, the index rose at a rate of 33 percent over its weekly average during the past 52 weeks.
The IPI is published by ECRI, a New York-based independent forecasting group, in association with The Journal of Commerce.
The index is based on prices of 18 industrial materials such as aluminum, plywood, burlap, crude oil and hides whose demand is closely linked to cycles in global industrial growth.
About half of the index’s commodities aren’t traded on exchanges and so are not influenced by speculation, making the index a historically reliable indicator of swings in demand.
Another sign the business cycle is heading upward came from ECRI’s Weekly Leading Index, a measure of future U.S. economic growth, which rose last week to a 36-week high as the index’s annualized growth rate advanced to its highest rate in 34 weeks.
ECRI’s Weekly Leading Index rose to 128.9 in the week ended Jan 14 from 128.1 the previous week. That was the highest level since May 7, when it stood at 132.1.
The index's annualized growth rate rose to 4.1 percent from 3.6 percent a week earlier. That was the highest since May 21, when it was 5.2 percent.
Contact Joseph Bonney at jbonney@joc.com