US sees nationwide price gains, including steel: Fed
US employers hungry for qualified workers are raising wages at an increasing pace while the cost of goods is rising nationwide, according to a Federal Reserve survey released Wednesday.
Steel prices are also mounting due to a drop in competing imports, according to the survey, even as the White House plans to impose steep tariffs on imports to support US producers.
The survey of business contacts, which reported "modest to moderate" economic growth in all 12 Fed regions, reinforced expectations that the central bank will raise rates later this month to contain anticipated gains in inflation.
Economists widely expect 2018 to be the year inflation finally responds to a decade of recovery in the world's largest economy. For years, steady job growth, falling unemployment and rising incomes have failed to spur significant price increases.
Markets also overwhelmingly expect the Fed to raise rates later this month -- but are on edge about how many more times the central bank could act this year, as it steadily brings an end to a post-crisis era of easy money.
Signals the Fed could raise rates four times, instead of the three forecast, have seen stock markets swoon since last month.
Businesses in recent months have also complained that tight labor is becoming an obstacle to continued growth.
"Prices increased in all districts," according to the survey, which covered developments in January and February.
"Four districts saw a marked increase in steel prices, due in part to a decline in foreign competition."
- Tight labor driving offshoring -
The report contained anecdotal information and did not quantify the price increases.
But major US manufacturers, joined by top Republican lawmakers, have pleaded with President Donald Trump not to go ahead with punishing steel and aluminum tariffs -- warning of job losses, slowed growth and retaliation by trading partners as a result of higher prices.
Top administration officials have rejected such worries, claiming price increases are likely to be minimal, especially for consumers.
But Fed contacts in the Cleveland, Atlanta, San Francisco and Dallas regions reported rising steel prices, in particular due to expectations that Washington could cut the supply of foreign product.
In much of the country, "wage growth picked up to a moderate pace," the survey said.
"Most districts saw employers raise wages and expand benefit packages in response to tight labor market conditions," it added.
Also in Cleveland, the sweeping $1.5 trillion tax cuts enacted in December were "reportedly enabling firms to invest more and to increase worker pay."
Rising input prices and scarce labor, however, are a constraint on growth and could hold down sectors such as construction and home building.
A Montana contact told the Fed, "many fear a better economy will exacerbate labor problems."
Across the San Francisco region, contacts said workers were scarce in the technology, accounting and finance sectors.
"Contacts in the health insurance sector increased their use of offshore labor and automation in response to tight labor conditions."
© 2018 AFP