Labor shortages and supply-chain disruptions are disrupting businesses across the country as the economic recovery from the coronavirus crisis intensifies.
Consumer spending accelerated in April and May, according to the Federal Reserve’s Beige Book report, as a surge in consumer spending coupled with higher vaccination rates and looser social-distancing measures, buoyed the central bank’s regional concerns about health. Provides anecdotal evidence gathered by peers. of the world’s largest economy.
However, in some cases businesses struggled to meet this demand, however, given the difficulties in obtaining materials and workers.
“Manufacturers reported that widespread shortage of materials and labor, along with delays in delivery, made it difficult for customers to receive the product,” the report said. “Similar challenges remained in construction. Homebuilders often noted that strong demand, fueled by lower mortgage interest rates, outweighed their ability to manufacture, limiting some sales.
Labor shortages were also widespread, with almost all the districts represented in the report seeing an impact on hiring and widespread job gains.
“It has been difficult for many firms to hire new workers, especially low-wage hourly workers, truck drivers and skilled traders,” it said. “Lack of job candidates prevented some firms from increasing production and, less commonly, some businesses reducing their hours of operation.”
While the report noted that an “increasing number” of businesses were offering benefits including signing bonuses and higher starting pay to fill positions, overall pay increases were “moderate”.
“Contacts expected labor demand to remain strong, but supply would remain constrained in the coming months,” the report said.
The Beige Book was issued at a turning point for the US economy and its top policymakers, as concerns grow that recent inflationary pressures may be more persistent than many expected.
Wednesday’s report acknowledged that costs have risen “across the board”, with the most obvious gains, especially in raw materials for construction and manufacturing.
“The strong demand, however, allowed some businesses, particularly manufacturers, builders and transportation companies to pass on the increased cost to their customers,” the report said. “Looking ahead, Contact expects to face increased costs and higher prices in the coming months.”
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