Costs of raw materials rose slightly in September—as PURCHASING's Industrial Supplies Price Index ( ISPI, 1992=100) of 115.1 was higher than the revised 114.1 of August—and the highest since the adjusted 116.6 in August 2001. The index averaged 114.6 in the third quarter, as compared with 111.5 in the second quarter and 105.3 in the first stanza.

Overall, there is downward pressure on numerous commodities because of excess supply and limited demand growth. "Tepid recoveries are vulnerable to backsliding on prices," says Morgan Stanley Analyst Leslie Ravitz. Note that pulp and paper prices still are lower than they were earlier last year, and wood products in September slipped in line with a slight slowdown in construction and rehabilitation spending. And for the key metals commodities, pricing is flat. Buyers say it's because the metalworking industry still is registering a sluggish recovery.

Energy prices stayed high in September because of higher oil prices, which have been blamed on talk of war in Iraq and not imbalanced supply. But the big movers for the past two months have been chemicals and plastics, as producers have been able to pass along most announced price hikes.