In a research note, the Federal Reserve Board presented new monthly input price pressure indices derived from free text responses to Institute for Supply Management surveys of manufacturing and services firms. The indicators classify reported price increases and decreases across roughly 50 categories and can provide a more timely and detailed view of cost pressures than official price data, with ISM reports released about two weeks before the Producer Price Index. Researchers used both sentence embeddings and Claude Sonnet 4.5 to map specific inputs into consistent, PPI-like categories. The methods produced broadly comparable results. The resulting 2024-2026 series captured price pressures associated with 2025 steel tariffs, disruption to shipping through the Strait of Hormuz in early 2026 and rising memory chip demand linked to the AI buildout. The oil and high-tech indicators moved ahead of their corresponding PPI measures in several instances. At the aggregate level, input price pressures peaked in April 2026 and declined in June, broadly tracking the year-over-year change in the final demand PPI. The findings support using the ISM survey text for nowcasting and as a potential leading indicator of the direction and magnitude of input cost pressures.
Federal Reserve Board publishes granular ISM based indicators of input cost pressures
The Federal Reserve Board presented new monthly input cost indicators derived from free text responses to ISM surveys and classified across roughly 50 PPI-like categories. The measures captured recent oil, steel and memory chip shocks and, in some cases, moved ahead of corresponding Producer Price Index data.