US economy grows modestly, slowed by supply chain, labour constraints – Fed
HOUSTON (ICIS)–The US economy continued to grow at a modest-to-moderate rate from October through mid-November, but continued to face headwinds from supply-chain disruptions and labour shortages, 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 19 November.
The comments about supply chains came from respondents in many districts, including the Dallas District, which includes all of Texas and northern Louisiana.
The region contains much of the nation’s petrochemical and refining capacity.
Outlooks were optimistic from respondents from the Dallas District, but saw rising uncertainty because of worsening supply-side constraints.
The district saw oilfield activity rise steadily over the past six weeks, the Fed said, as optimism remained high because of high prices for oil and natural gas.
Respondents in the district said they expect a moderate increase in production and improved margins.
Respondents told the Fed they saw prices rise at a moderate-to-robust pace, with spikes evident across most sectors of the economy.
Prices were pressured by multiple factors, including input cost increases due to strong demand for raw materials, logistical challenges and tightness in the labour market.
Respondents did note the improving availability of some inputs, including semiconductors and some steel products.
This could be welcome news for the auto industry, which has seen production lag previous years because of the shortage of microchips.
The continued strong demand allowed companies to pass through increases without much pushback, the Fed said.
The Fed said employment growth over the period was modest to strong, but that respondents had difficulty in hiring and retaining employees.
Many Districts noted concerns that the federal vaccination mandate could exacerbate existing hiring difficulties.
Wages have risen as businesses increased pay to overcome hiring struggles and elevated turnover rates, the Fed said.