March 2022 Federal Reserve Board's Beige Book

DISCLAIMER: Below are excerpts from the Federal Reserve Board's Beige Book published on March 4, 2022. It "... was prepared at the Federal Reserve Bank of St. Louis based on information collected on or before February 18, 2022. This document summarizes comments received from contacts outside the Federal Reserve System and is not a commentary on the views of Federal Reserve officials."

The excepts are chosen for their relevancy to the recruitment, staffing, employment services, and IT services sectors. The inclusion or exclusion of any sections or wording, the inclusion of each District's service areas (note that sections of some states are divided and end up in more than Fed District), as well as emphasizing certain sections with special typefaces (e.g. bold-faced and / or highlighted) is done solely at the discretion of steinbergemploymentresearch.com. The full report can be found at the Federal Reserve Board.

First District  --  Boston (CT, MA, ME, NH, RI & VT)  return to District list

Business activity expanded at a slight to modest pace in recent weeks. Consumer spending on goods, including autos, increased at a moderate pace, but restaurants sales plummeted during the Omicron surge. Manufacturers enjoyed robust demand, and revenues increased slightly on balance. Revenues at staffing firms were mixed but up modestly on average. ... Labor demand remained very strong, but employment appeared roughly stable as some firms struggled to hire and/or retain workers. Upward wage pressures remained substantial but eased for some positions. ...Contacts were almost unanimously optimistic for spring, although some mentioned downside risks tied to inflation and supply chain issues.

Labor Markets

First District labor markets remained tight on balance, as upward wage pressures persisted, and employment appeared stable. ... Manufacturing headcounts were up by modest to large margins on a year-over-year basis but were mostly stable recently. Manufacturers offered mixed descriptions of the labor market, as some experienced no hiring difficulties and others complained of high turnover or faced a scarcity of candidates. Staffing firms noted that turnover remained elevated at their own firms as well as at client firms. Staffing contacts also said that wages faced strong upward pressure across a wide variety of jobs and skill levels amid rising price inflation. However, wage growth appeared to slow or level off for selected positions and was relatively moderate among manufacturers. Contacts expected robust labor demand to persist but said that wage growth could slow moving forward in light of the substantial wage increases already seen in recent months.

Manufacturing and Related Services

All eight contacts reached this round reported strong demand, but in some cases supply chain issues held back revenue growth, and sales increased slightly on average. Supply disruptions mostly affected production, but some firms' customers cancelled their orders because other suppliers could not deliver. One firm suffered from production delays in January when many workers were out sick with COVID. Most contacts were trying to hire, although one planned to focus on retention after expanding headcounts by a very large margin in 2021. Planned wage increases were low to moderate, but signing bonuses and recruiting fees also boosted labor costs. ... The outlook was generally positive although some contacts expected supply chain problems to persist or even intensify moving forward.

Staffing Services

Revenues at staffing firms increased modestly on average, as two contacts reported no changes from the previous quarter, one recorded substantial growth, and one experienced a modest decline. Talent acquisition remained a challenge for all firms, especially in filling temporary positions and jobs requiring in-person work. One contact offered bonuses to new hires who stayed in their roles for at least 90 days, and another boosted salary for its own recruiters to improve retention. Scarcity of childcare continued to crimp labor supply, but contacts said they were surprised to have seen relatively little pushback to vaccine mandates. In response to labor scarcity one firm moved to accelerate the placement of available candidates, and another said that the ease of starting remote work had also sped up the hiring process. However, the faster placement pace put more pressure on clients to train and fully vet new hires. Looking ahead, all contacts were optimistic about the coming months in light of the resilience the economy had shown during the Omicron surge and the strong ongoing demand for workers in a variety of roles. Some contacts expressed concern over the inflation outlook, however, and one perceived an increased risk of recession.

Second District  --  New York (CT, NJ & NY)  return to District list

Growth stalled in the Second District in early 2022, with ongoing supply disruptions, worker shortages, and the Omicron outbreak impeding activity. Despite these challenges, contacts expressed fairly widespread optimism about the near-term outlook. Businesses continued to report substantial increases in selling prices, input prices, and wages. The job market has remained exceptionally tight, with businesses continuing to add staff, on net, and dealing with unusually high absenteeism. ..

Labor Markets

Despite ongoing worker shortages, job growth picked up to a moderate pace. Staffing agencies reported that job openings remained plentiful, particularly for technology, sales, and human resource workers. One agency in New York City noted that many job candidates are being selective based on telecommuting policies, while an upstate New York agency noted that vaccination policies are a major sticking point. Worker shortages persist across a wide range of industries and occupations. Businesses in most major industry sectors plan to add staff, on net, in the months ahead.

Contacts in all sectors reported that they were raising wages and planned to do so in the months ahead. An upstate New York employment agency noted particularly rapid wage growth, and a New York City agency reported that companies have become somewhat more flexible on pay. The January 1st hike in minimum wages across New Jersey and much of New York State reportedly prompted many businesses in manufacturing, distribution, and leisure & hospitality to raise wages more than they otherwise would have — not just for workers at the threshold but for those somewhat higher in the wage distribution as well to mitigate wage compression.

Manufacturing and Distribution

Manufacturing activity was essentially flat in early 2022, whereas businesses in the wholesale, transportation, and warehousing sectors continued to report fairly brisk growth. Contacts in these areas have indicated that continued worsening in supply disruptions and escalating prices have further impeded activity. Still, businesses in all of these sectors continued to express optimism about the near-term outlook, though to a somewhat lesser degree than in the last report.

Services

Activity in the service sector contracted in early 2022. In particular, leisure & hospitality businesses noted further weakening in activity—apparently driven largely by the Omicron outbreak. Education & health providers also noted some slowing. However, businesses in the information and professional & business services sectors reported that activity was steady to slightly higher. Still, businesses in all these industries remained broadly optimistic about the near-term outlook.

The Omicron outbreak led to a slump in both tourism and related service-sector activity in New York City in January, though there were scattered signs of a pickup in February. Hotel occupancy and revenue, which fell sharply in January, have begun to rebound, and trade shows have picked up, and this trend is expected to continue into March. A record low number of Broadway shows were open in January, but a dozen new shows are slated to open soon. Subway ridership, which had turned down sharply in December, began to resume its upward trend in January and through mid-February.

Third District  --  Philadelphia (DE, PA & NJ)  return to District list

On balance, business activity in the Third District continued to grow modestly in the current Beige Book period. Activity in several sectors had not yet returned to pre-pandemic levels. Since the prior Beige Book, the rate of cases from the Omicron variant of COVID-19 continued to surge to an all-time high in mid-January, then quickly receded to levels last observed in November. Many contacts noted that disruptions to business operations were significant and pervasive, as workers called in sick. The rate of all persons being fully vaccinated rose to 70 percent. Employment grew modestly as firms continued to face challenges in hiring and retaining workers. Wages rose sharply again, but there were signs that the increases may be plateauing. ...

Labor Markets

Employment grew modestly, with growth in most sectors more subdued than last period. The share of firms reporting employment increases remained near one-fifth of the nonmanufacturing firms and edged down to one-third among the manufacturers. Overall, about one-fifth of the firms reported a rise in average hours worked; less than one-tenth reported a decline.

Staffing firms and most employers continued to report significant difficulty attracting and retaining labor, while the surge in Omicron cases created daily staffing challenges. One staffing firm noted that one staff member spent most of two weeks just keeping tabs on COVID cases among its placements.

Wages continued to rise substantially, but reports suggest that the rate of change may be plateauing. In our monthly surveys, the share of nonmanufacturing firms reporting higher wage and benefit costs per employee fell to 54 percent in February from 59 percent in December. Less than 5 percent of the firms reported lower compensation, and that represented an increase from prior months when almost no firms reported lower compensation.

On a quarterly basis, firms reported a somewhat lower expectation of the one-year-ahead change in compensation cost per worker, with a trimmed mean of 5.5 percent in the first quarter of 2022 – down from 5.8 percent in the fourth quarter of 2021.

Manufacturing

On average, manufacturing activity continued to grow modestly. Overall, the share of firms reporting increases in shipments and new orders edged higher than in the prior period; however, reports softened in recent weeks. Reports of rising backlogs were more pervasive, but increases in delivery times and inventories were less widespread.

Nonfinancial Services

On balance, nonmanufacturing activity grew slightly – contacts noted negligible growth early in the period but reported some recovery by the period's end. Overall, the share of firms reporting increases in sales fell from one-half to about two-fifths, while the share reporting increases in new orders edged down to about one-fourth. However, at the outset of the period, these shares were nearly equaled by the shares of firms reporting decreases in sales and in new orders. Reports of decreases subsequently subsided.

Fourth District  --  Cleveland (KY, OH, PA & WV)  return to District list

The Fourth District economy grew at a slower, more modest pace in recent weeks. Demand was generally solid, but the surge of Omicron-related coronavirus infections temporarily dampened activity in some high-contact services such as restaurants and retail stores. Contacts reported that their outlooks were largely unchanged and that they continue to expect a strong year for sales. There were scattered reports that supply chain disruptions may have eased for some materials. That said, contacts expected it could be the second half of this year or even 2023 when supply chains normalize. Amid persistent labor shortages, employment increased moderately, while pay increases were widespread.

Labor Markets

Employment rose moderately during the reporting period. A few firms indicated it had become slightly easier to hire, but for the most part reports of labor shortages remained widespread. Contacts with customer-facing operations noted that the spread of the Omicron variant had temporarily disrupted operations in early January as staff absences increased. However, such disruptions quickly abated as the month progressed. Many firms commented that employee turnover was high for various reasons, including a greater desire to work remotely, receive higher wages, change careers, or find better working conditions. One university representative expressed great concern that educators were leaving the profession in large numbers because the current work environment was "not what they had signed up for." Generally, contacts saw few reasons to believe labor supply will soon improve meaningfully.

Reports of wage increases were widespread across sectors as firms struggled with the scarcity of workers. Contacts indicated that recent pay raises were often in the high single-digit or low double-digit percentages and that wage pressures were broad across the pay scale. Despite substantial pay raises, contacts had mixed results in attracting or retaining workers. A few staffing agents expected wage growth for lower-paid workers to slow in the coming year, saying that businesses cannot afford to pay much more. However, contacts expect wage pressures for higher-skilled workers to remain elevated.

Manufacturing

Manufacturing orders increased slightly from already high levels. Contacts noted that output was stifled by shortages of raw materials and workers. Aerospace equipment manufacturing continued to recover, but auto suppliers said that carmakers purchased less than they had expected because of shortages of microchips and other parts. High staff turnover and rising wages prompted some firms to spend more on labor-saving technology. That, in addition to increased overtime hours and alternative work arrangements (for example, having non-floor staff step into hands-on roles) allowed some firms to boost production. Most manufacturing contacts expected demand to increase in the coming months, although they expected supply chain disruptions to persist.

Professional and Business Services

Demand for professional and business services remained robust. Contacts noted that clients continued to invest in software upgrades and that demand for cybersecurity services increased. Activity related to mergers and acquisitions was strong, as was demand for human resource services. Furthermore, increased infrastructure investments by state and local governments lifted demand for engineering services. Contacts anticipated demand would remain strong as businesses continue to invest in technology improvements and as infrastructure investments become more widespread

Fifth District  --  Richmond (MD, NC, SC, VA & WV)  return to District list

The regional economy grew moderately in recent weeks, but growth continued to be constrained by supply chain and transportation issues and labor shortages. Manufacturers reported a modest increase in new orders, but shipments declined slightly as production was impacted by weather, long lead times for inputs, truck and container shortages, and an increase in employee absenteeism due in part to the Omicron variant. ... Nonfinancial firms reported a modest increase in revenues but continued to struggle hiring enough workers to meet demand. Employment grew moderately, overall, but a large number of firms reported shortages of workers. In response, firms increased wages and looked to benefits and flexible arrangements to attract and retain talent. ...

Labor Markets

Employment continued to increase at a moderate rate in the Fifth District. Demand for labor remained strong and, for many firms, far exceeded the supply of available workers. This led firms to increase wages moderately and to offer additional benefits, including flexible working arrangements, to attract workers and to retain existing staff. Some firms noted that even after doing so, they lost employees to companies who were willing to pay higher wages or were fully remote. Some employers were willing to loosen requirements on education and experience in favor of on-the-job training to fill open positions. One employer added that advancements in technology allowed them to hire workers without a four-year degree in computer science.

Manufacturing

Fifth District manufacturers reported a modest increase in new orders since our previous report. Firms reported a slight decline in shipments, however, which was attributed to winter weather, workforce challenges, availability of shipping containers and trucks, and delays in receiving inputs from vendors. Some of the workforce challenges were due to employees testing positive for covid during the surge of cases from the Omicron variant, while some were simply due to not having enough workers to meet an elevated level of demand. Although most manufacturers reported growth in new orders, one firm said that new orders slowed for them because some of their customers' inventory levels were back up to normal.

Nonfinancial Services

Nonfinancial services firms saw a modest increase in revenues in recent weeks and several businesses said that demand was starting to pick up. One professional service firm said that being able to attend conferences again was helping boost business. Many firms continued to struggle with employee turnover and hiring difficulties, making it challenging to meet demand. One contact also noted that turnover among project managers at their clients' businesses caused disruptions to projects flows.

Economic activity in the Sixth District expanded at a moderate pace, on net, from January through mid-February. Demand for workers remained strong, and labor market tightness endured. Upward pressure on wages was widespread, especially for lower-paid positions and skilled trades. Nonlabor costs grew, and firms' pricing power increased. Retail sales were healthy, but auto sales remained constrained by lack of supply. ... Manufacturing activity was strong. ...

Labor Markets

Demand for workers remained strong over the reporting period and tightness in the supply of labor persisted. However, many contacts indicated labor market conditions have eased modestly since the beginning of the year. Poaching of employees lessened somewhat. Most firms continued to hire to fill vacant positions while others looked to grow headcounts to meet strong business demand. A high-end restaurant noted moving to a scheduling system that utilizes employees' preferences for work, allowing them to "shift surf" among several restaurants to accommodate personal schedules and maximize income, which ultimately resulted in staffing shortages at some establishments. Reports also indicated a significant shortage of skilled technicians resulting in long waits for service calls and repairs to commercial equipment and vehicles. Several firms noted that while there was a spike in absenteeism related to the Omicron variant surge and more employees were impacted, the new variant moved through more quickly than earlier variants.

Although upward pressure on wages was widely reported, particularly at the lower end of the pay scale and among skilled trades, bonuses were used to attract and retain employees as firms tried to hold the line on wage increases. Some contacts noted that positions which offered flexibility were easier to fill. Wages are expected to continue to rise this year, but there is a great deal of uncertainty around the pace of growth.

Manufacturing

District manufacturers experienced continued strong demand and healthy pipelines over the reporting period, with several noting historically high sales levels, profitability, and improved margins. Several contacts reported ongoing delays in the procurement of components and spare parts, particularly from China. The outlook for manufacturers, while optimistic about demand, was somewhat to the downside amidst growing geopolitical risks, continued supply chain constraints, and inflation.

Seventh District  --  Chicago (IA, IL, IN, MI & WI)  return to District list

Economic activity in the Seventh District increased moderately in January and early February, and contacts expected a similar pace of growth over the coming months. Labor and materials supply constraints as well as the spread of COVID-19 continued to weigh on the expansion. Employment increased strongly; consumer spending, business spending, and manufacturing were up modestly; and construction and real estate grew slightly. Wages and prices rose rapidly, while financial conditions deteriorated some. Expectations for 2022 agricultural income moved up.

Labor Markets

Employment increased at a strong pace over the reporting period, and contacts expected moderate growth over the next 12 months. Contacts across sectors reported persistent difficulty in finding workers at all skill levels. That said, one contact indicated it was easier to find workers now than in the fourth quarter of last year. A lack of labor was preventing a number of contacts from producing enough to meet strong demand. In addition, a construction contact reported that limited availability of higher skilled workers meant they were relying more on lower skilled workers, reducing productivity. Contacts also noted that the spread of the Omicron variant had pushed up absenteeism and slowed production; however, workers were typically recovering faster and returning to work sooner than in previous waves. Overall, wage and benefit costs increased robustly. A scarcity of applicants for open positions led numerous contacts to raise wage offers, yet not all were successful in filling open positions. In higher education, one contact noted that institutional policies were limiting wage offers and making it very difficult to hire. To retain workers, many employers increased the frequency of pay raises or profit sharing.

Manufacturing

Manufacturing production increased modestly in January and early February. Despite strong demand for the majority of manufacturers, capacity constraints due to challenges in securing inputs (particularly labor) limited production gains. Auto output dropped slightly, as assemblers and suppliers continued to face shortages of microchips and other materials. ...

Economic conditions have remained unchanged since our previous report. Employers reported robust wage increases and continued difficulties finding workers. Price increases were greater than expected across several industries, with supply chain issues and strong demand contributing to ongoing price pressures. Firms reported improved ability to pass on price increases and anticipate continued increases in the short term, although retailers reported signs of softening demand among lower income households. Winter weather, labor shortages, and Omicron COVID-19 disruptions led to decreased activity in the transportation and hospitality sectors. ...

Labor Markets

Employment has increased slightly since our previous report; on net, 5 percent of contacts reported increasing employment since last year. Firms continued to report a shortage of workers, with some contacts investing in labor saving automation, structural changes, or service reductions. Other contacts emphasized changes in their hiring practices; one industrial contractor, unable to find qualified labor, reached out to a local school district about an apprenticeship program.

Wages have grown robustly since our previous report. On net, 65 percent of contacts reported increasing wages. Small firms continue to struggle to match ever-growing market wages. Wage increases at firms with worker shortages were compounded by increased overtime; one manufacturer estimated a 5 percent to 20 percent increase in labor costs from overtime and hazard pay.

Manufacturing

Manufacturing activity has slightly increased since our previous report. Survey-based indices suggest that production, capacity utilization, and new orders have all slightly increased. Firms in Arkansas and Missouri reported slight reductions in production and slight upticks in new orders. The Omicron COVID-19 variant applied pressure to manufacturing labor, both in terms of worker hiring and absenteeism. ... Firms continue to invest in process automation to address the systemic workforce shortage, with one manufacturing company in Arkansas tripling their number of robotic welders. On average, firms reported they expect slight increases in production, capacity utilization, and new orders in the third quarter, and they remain optimistic about the level of production.

Nonfinancial Services

Activity in the nonfinancial services sector has decreased since our previous report. ... A healthcare contact reported that the combination of COVID-19 and winter weather led to a decline in patient volumes of over 30%. Despite this, hospitals continue to deal with significant labor shortages. A transportation contact mentioned that a lack of qualified labor—specifically, truck drivers—has hindered business. A technology contact reported that rising interest rates are leading to purchasing hesitancy among customers.

Ninth District  --  Minneapolis (MI, MN, MT, ND, SD & WI)  return to District list

Ninth District economic activity increased moderately since early January. Employment saw moderate growth, though hiring was constrained by tight labor availability. Wage and price pressures were strong, with particularly strong pressure on input prices. Growth was noted in consumer spending, professional services, commercial construction, manufacturing, and energy. ...

Tenth District  --  Kansas City (CO, NM, MO, NE, OK & WY)  return to District list

The Tenth District economy expanded at a modest pace in the first two months of the year. Although the surge in COVID-19 cases associated with the Omicron variant slowed spending and hours worked in the leisure and hospitality sector, activity rebounded quickly as the surge diminished and grew steadily across other service and manufacturing sectors. ... Supply chain disruptions adversely affected most businesses, leading many retailers and manufacturers to adopt more costly sourcing strategies. Wages grew at a robust pace across industries and occupations. Although wages paid in lower-skill jobs increased, losses in hours worked associated with the pandemic slowed income growth for many low-income households near the start of the year. ...

Labor Markets

Total hiring grew at a modest pace near the start of the year, constrained by labor shortages. Several businesses reported job openings in excess of twenty percent of their current workforce, with more jobs open than are actually posted. ... Total hours worked in leisure and hospitality declined sharply in early January, but rebounded in recent weeks. Manufacturing employment grew at a moderate pace.

Wage growth remained robust and broad-based in recent weeks. Many low-wage workers reported wage gains obtained by job switching or union bargaining outcomes, but also noted inconsistent incomes due to lost working hours associated with school closures or family illness in early January. Contacts noted they continued to increase non-wage benefits offered to workers, but some reported that these benefits did not attract a larger number of applicants. In particular, applicants for entry-level or low-wage jobs favored higher wages over additional benefits. Most businesses expect wages to continue growing over the medium term.

Manufacturing and Other Business Activity

Growth in the manufacturing sector slowed to a modest pace, with total levels of activity near historic highs. The leisure and hospitality sector remained sensitive to developments related to the pandemic, but other business activity expanded throughout recent weeks. Expectations for growth remained elevated broadly. Nearly all contacts reported no expected changes in business plans related to the pandemic over the medium term.

Contacts across many sectors, geographies and sizes reported changes to their procurement plans for the coming year to include a broader network of suppliers, in an attempt to shorten or stabilize delivery times. Yet, most contacts expect that costs of sourcing from new suppliers will remain elevated. Some indicated that the new relationships with suppliers, or lack thereof, would increase procurement costs over the medium term. Others indicated procurement costs would remain elevated because of the need to double-order inventory, choosing to take on risks of having too much inventory to ensure delivery of needed materials.

The outlook for capital expenditures from business contacts was mixed across sectors. Planned investments among aerospace and other transportation businesses increased recently, and also at food manufacturing businesses. Many of these capital expenditures are aimed at automation to mitigate the effects of labor shortages. In healthcare, planned capital expenditures were suppressed and aimed at maintaining capacity, rather than expanding it. Contacts in hospitality sectors reported growth in plans to renovate and upgrade spaces to attract customers. In addition to capital expenditures, several contacts noted that spending on marketing and advertising is growing amid healthy consumer demand.

Eleventh District  --  Dallas (LA, NM & TX)  return to District list

Expansion in the Eleventh District economy moderated, with the COVID-19 surge exacerbating labor and supply-chain shortages and disrupting demand in certain sectors. Growth in manufacturing and nonfinancial services continued but at a slower pace, and retail sales declined slightly. ... Employment rose fairly robustly, and wage growth pushed to new highs due to widespread labor shortages. Supply-chain issues continued to drive up costs, and prices rose at a rapid clip. Outlooks remained positive, though uncertainty surged and businesses expressed concern that labor market tightness and supply-chain disruptions will not soon be resolved.

Labor Markets

Employment growth remained robust. Job gains were widespread across sectors and strongest in manufacturing, banking, real estate, and health care. Acute worker shortages persisted, however, and many contacts said the recent COVID-19 surge brought on new or worsened hiring difficulty. Contacts cited a lack of applicants as the primary hiring impediment, with significantly more saying the availability of applicants worsened than improved in January. Increased absenteeism was also a major problem over the reporting period, as workers called out sick due in large part to the Omicron surge. These absences resulted in significant widespread disruption to business operations.

Wage growth pushed to new highs over the reporting period, driven largely by labor shortages. Manufacturers noted persistent difficulties in retaining employees, saying they were having to increase wages significantly to try to convince workers to stay. This sentiment was echoed in the service sector as well, with some firms being forced to give out significant pay increases or lose key employees. A bank raised their minimum wage to $18 per hour, slightly mitigating retention issues.

Nonfinancial Services

Growth in Texas service-sector activity slowed sharply in January but rebounded in February. Seventy percent of firms noted a negative impact from the COVID-19 surge, and the biggest drag on January growth came from the leisure and hospitality sector, where revenues declined notably.... A bright spot in the service sector was staffing services, which saw a pickup in revenues and broad-based, robust demand. Overall, pandemic-related weakness in the nonfinancial services sector was largely transitory, as revenue growth increased markedly in February.

Outlooks held steady in January and improved in February. Headwinds include uncertainty surrounding the path of the pandemic, supply-chain stresses, and inflation.

Economic activity in the Twelfth District strengthened moderately during the reporting period of January through mid-February. Employment grew further while overall labor market conditions remained tight. Wages and price levels continued to climb notably, driven by materials and labor shortages. Sales of retail goods increased solidly, while conditions in consumer and business services picked up following a decrease in new COVID cases related to the Omicron variant. ..

Labor Markets

Employment levels grew further, with reports focusing on labor market tightness. Firms across the District continued to cite difficulties attracting qualified candidates for both high- and low-skilled positions, with many reporting elevated numbers for job openings and few applicants. Labor shortages for entry-level and low-wage positions were widespread, especially in the consumer services and farming industries. Firms in the finance, manufacturing, and energy sectors reported stable employment levels and comparatively lower turnover. Meanwhile, firms looking to fill openings for accounting, legal, technology, architecture, construction, and engineering positions continued to compete intensely for talent. Many contacts across the District mentioned higher rates of voluntary quits and early retirements, partially due to concerns about health risks during the recent Omicron wave. A few employers in Alaska and Utah highlighted especially difficult hiring conditions, citing candidates who missed scheduled interviews and newly hired workers who failed to show up on the first day at their new job.

Wages increased considerably over the reporting period. The mismatch in supply and demand for workers continued to put upward pressure on wages, especially in the consumer services sector. Contacts across the District reported increasing wages from 3 to 20 percent, depending on the skill level and sector. California contacts mentioned additional pressure from new minimum wage legislation that came into effect in early 2022. A few from the manufacturing sector observed a slight deceleration in the rate of wage inflation.

Manufacturing

Conditions in the manufacturing sector were mixed. Many manufacturers continue to report difficulties in filling orders due to supply chain disruptions, worker shortages, tight inventories, and increased material costs, such as those for lumber and steel. ... A manufacturer of packaging machinery noted increased demand for process automation equipment in the face of widespread worker shortages. A manufacturer of renewable energy equipment highlighted uncertainty regarding fiscal policy and continued infrastructure investment.

© 2022, Bruce Steinberg.  All rights reserved.

last updated March 02, 2022