American businesses are feeling more optimistic as vaccinations against Covid-19 become common, and economic activity accelerated moderately in recent weeks, the Federal Reserve said on Wednesday in its survey of business conditions.
However, some areas are seeing prices rise, both as a consequence of supply chain snarls and increasing demand as consumers resume daily life with COVID-19 less of a threat, according to the central bank's beige book survey.
In the period from late February to early April, economic activity increased to "a moderate pace," while "consumer spending strengthened" and "manufacturing activity expanded further" with half of the Federal Reserve's districts "citing robust growth," the survey said.
"Outlooks were more optimistic than in the previous report, boosted in part by an acceleration in Covid-19 vaccinations," it added.
The report also showed early signs of complications resulting from reopening the economy after the pandemic forced many businesses to downscale or modify operations for almost a year, with supply chain disruptions stopping companies from meeting some orders.
"Severe myriad supply constraints continued to hamper potential growth from demand described as 'on fire,' and activity remained below levels attained prior to the pandemic," the Philadelphia district reported.
There were also signs of price increases, which is a dynamic that will be closely watched in coming months given massive government spending that's prompted fears from Wall Street and some economists that the world's largest economy is set for a prolonged spike in inflation.
"Input costs rose across the board, but especially in the manufacturing, construction, retail, and transportation sector -- specifically, metals, lumber, food, and fuel prices," the report said.
"Cost increases were partly attributed to ongoing supply chain disruptions, temporarily exacerbated in some cases by winter weather events."
With the economy still short millions of jobs that existed before the pandemic, the survey said most districts reported "modest to moderate increases in headcounts" with the strongest gains seen in manufacturing, construction and leisure and hospitality -- the sector most devastated by the virus.
Some positions were in short supply, specifically commercial and delivery drivers as well as skilled tradespeople. Manufacturing and construction firms were having trouble finding workers, and some raised pay or offered signing bonuses in response, the survey said.
The vaccines have caused Covid-19 cases to decrease nationwide, and the report said some firms were noticing less absenteeism due to the disease.
Copyright Agence France-Presse, 2021
