(Finance) – Inflationary pressures in the US remain strong, with companies continuing to pass on rapidly increasing input costs to customers. Companies, particularly those in the manufacturing sector, are noticing a sharp rise in the costs of raw materials, transportation and labor. The business is influenced by “spikes in the prices of energy, metals and agricultural products following the Russian invasion of Ukraine “, while many entrepreneurs note that” the blocks due to Covid-19 in China have worsened supply chain disruptions“This is stated by the Federal Reserve in the Beige Book, the report on the state of the US economy that will be the basis for upcoming monetary policy decisions. The report is based on anecdotal information gathered by the Fed’s 12 regional banks up to 11 April.
Strong demand generally allows companies to pass on increases in input costs to customers, for example through fuel surcharges for freight and airfares. “However, contacts in some districts have noticed a negative impact on sales due to price increases – it is emphasized – Businesses in most districts expect inflationary pressures to continue in the coming months “.
Regarding the labor market, it is highlighted that employment “has increased at a moderate pace”. Demand for workers continued to be strong in most districts and industrial sectors, but the hiring was held back by the general lack of available workers, although several districts reported signs of modest improvement in worker availability. According to data collected by the FED, “persistent demand for labor has continued to fuel strong wage growth, particularly for workers willing to change jobs”. The companies have reported that the Inflationary pressures are contributing to higher wages and that higher wages are doing little to alleviate widespread job vacancies.
All this has led to aeconomic activity growing “at a moderate pace since mid-February. “Consumer spending has increased among retail and non-financial service companies, as cases of Covid-19 have shrunk across the country. Manufacturing activity has been” solid overall “in most of districts, but supply chain backlogs, labor market rigidity and high input costs continued to impose challenges to companies’ ability to meet demand. Farmers have been buoyed by rising crop prices, but drought conditions have been a challenge in some districts and rising input costs are squeezing producer margins nationwide. “The prospects for future growth have been clouded by the uncertainty created by recent geopolitical developments and by rising prices,” he stressed.