Costs of raw materials rose slightly in October—as PURCHASING's Industrial Supplies Price Index (ISPI, 1992=100) of 115.5 was higher than the 115.1 of September—and the highest since the adjusted 116.6 in August 2001. The rise in the latest monthly index is attributable to energy costs, which have been high for four months now.

Few economists expect the U.S. economy to fall back into recession, but they do believe manufacturing will slow over the next half year. Market analysts believe commodity prices may plateau at current levels—or even slide—in the fourth quarter. Economist John Mothersole at DRI-WEFA says "the inability of manufacturing companies to boost sales prices to cover rising material costs has been cited as one of the chief signs of a weak rebound in the broader economy." And there are good reasons for the current pause in the manufacturing recovery. The boost from inventory restocking has come and gone and, while, consumers still are spending, they are doing it selectively and not with reckless abandon. Also, the strength of the dollar has kept imports strong, and "is keeping price increases from getting out of hand," says Mothersole.