The ISM prices index jumped to 77.9. Do you treat price surveys as an early warning for CPI?

The Institute for Supply Management's manufacturing survey for September showed its prices index up 6.8 points to 77.9, after 71.1 in both July and August. In services, the prices index was 74.0, up from 72.6. A reading above 50 means more firms report paying higher prices than lower ones (full report).

The official consumer price numbers come later and measure what households actually pay. August's CPI showed inflation at 3.4% with core at 2.4% (report), and the PCE price index was 3.4% with core at 3.0% (report). September's CPI is published on 14 October. Surveys of what firms pay for inputs are sometimes read as an early warning of what consumers will pay, but the link is loose: input costs can be absorbed by margins or reach consumers months later.

We would like to hear how members use these surveys:

• Do you treat the ISM prices indexes as a leading signal for CPI, or do you only use them as background?
• Have you seen a jump in a prices survey that did not show up in consumer prices, or the reverse?
• Which other surveys do you check for price pressure, for example regional Fed surveys or PMI price components?
• Do you adjust expectations for the CPI release in advance, or wait for the number?

PMIs explained covers how the survey indexes are built.

Please share your own approach and reasoning. Posts that promise a direction or sell signals will be removed.