Labor shortages and supply chain disruptions are hampering businesses across the country as the economic recovery from the coronavirus crisis accelerates.
The pace of the rebound accelerated in April and May as consumer spending rebounded alongside higher vaccination rates and looser social distancing measures, according to the Federal Reserve’s Beige Book report, which offers anecdotal evidence gathered by regional central bank counterparts on health. of the world’s largest economy.
However, companies have sometimes struggled to meet this demand, given the difficulties in sourcing materials and workers.
“Manufacturers have reported that widespread material and labor shortages as well as delivery delays make it difficult to get products to customers,” the report said. “Similar challenges persisted in construction. Home builders have often noted that strong demand, supported by low mortgage interest rates, is outstripping their building capacity, leading some to limit sales.
Labor shortages were also pervasive, with almost all of the districts represented in the report noting an impact on hiring and broader job gains.
“It has remained difficult for many companies to hire new workers, especially low-wage hourly workers, truck drivers and skilled tradespeople,” he said. “The lack of job candidates has prevented some companies from increasing their production and, more rarely, has led some companies to reduce their opening hours. “
While the report noted that a “growing number” of companies were offering perks, including signing bonuses and higher starting salaries to fill positions, overall wage growth was “subdued.”
“Contacts expected labor demand to remain strong, but supply limited, in the coming months,” the report added.
The Beige Book was released at a critical time for the U.S. economy and its key policymakers, as concerns grow that recent inflationary pressures may be more lingering than many realize.
Wednesday’s report acknowledged that costs have increased “across the board”, with the most pronounced gains in raw materials for construction and manufacturing in particular.
“Strengthening demand, however, has allowed some companies, especially manufacturers, builders and transportation companies, to pass much of the cost increases on to their customers,” the report said. “Going forward, the Contacts plan to face cost increases and charge higher prices in the coming months.”