HOUSTON (ICIS)--Supply chain disruptions that have persisted throughout the pandemic and were intensified by Winter Storm Uri are likely to take longer than anticipated to clear up, the Federal Reserve said on Wednesday.
The central bank made its comments in the Beige Book, a summary of US economic activity during the past six weeks among its 12 districts.
The latest Beige Book is based on information collected on or before 2 July.
The comments about supply chains came from respondents in the Dallas District, which includes all of Texas and northern Louisiana. The region contains much of the nation's petrochemical and refining capacity.
Petrochemical production has mostly recovered from the outages associated with Uri, the Fed said, but some production continues to be weighed by a combination of maintenance and outages.
Refiners cited strong seasonal demand but noted that margins were still weak.
For energy, oilfield services firms told the Fed that drilling and well completion activity expanded moderately, but labor issues kept them from expanding further.
Exploration and production firms expect the market to support a WTI crude price near $70/bbl in the second half of the year.
At that price, capital spending plans would likely be little changed among large US producers, the Fed said.
Overall, respondents said the US economy has strengthened from the previous report, showing modest to robust growth.
Inflation remains a concern as prices increased at an above-average pace, with seven districts reporting strong price growth and the rest seeing moderate gains.
While some contacts felt that pricing pressures were transitory, the majority expected further increases in input costs and selling prices in the coming months.
Thumbnail image shows interior of a warehouse/Shutterstock