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21.10.2021 09:41 AM
US market on October 20, 2021

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S&P500

Overall economic activity

According to most Federal Reserve districts, economic activity in the US has recently grown at a modest to moderate rate. However, several districts attributed the slowdown to supply chain disruptions, labor shortages, and uncertainty around the Delta variant of COVID-19. A majority of Fed districts indicated positive growth in consumer spending, although auto sales were widely reported as declining due to low inventory levels and rising prices. Travel and tourism activities varied from district to district. Some saw a continuation or expansion of tourist trips, while others saw a decline, which coincided with an increase in COVID cases and the start of the school year. Production in most parts of the country rose from moderate to high levels, as freight trade did. Growth in non-manufacturing activity ranged from slight to moderate for most districts. Loan demand in this period was generally assessed from stable to moderate. Residential real estate activity slowed down slightly. However, the market remained healthy.

Non-residential property reports varied by district and market segment. Conditions in agriculture were mixed, and overall energy markets were largely unchanged. Outlooks for near-term economic activity remained positive, but some districts noted increased uncertainty and more cautious optimism than in previous months.

Employment and wages

The Fed also said employment increased at a modest to moderate rate in recent weeks, as demand for workers was high, but labor growth was dampened by a low supply of workers. Transport and technology companies faced particularly low labour supply, while many retail, hospitality, and manufacturing businesses reduced working hours or production due to a shortage of workers. Companies reported high staff turnover as workers left for other jobs or retired. Childcare problems and vaccinations were often cited as contributing factors to the problem, along with COVID-related absence from work. Many companies offered extended training to increase the number of candidates. In some cases, companies increased automation to make up for labour shortages. Most districts reported stable wage growth. Firms reported increases in starting salaries to attract talent and pay raises to employees to retain them. Many companies also offered signing and retention bonuses, flexible working hours, or increased leave to encourage workers to stay in their positions.

Prices

Most districts reported significantly elevated prices, fueled by rising demand for goods and raw materials. Reports of input cost increases were widespread across industry sectors, driven by product scarcity resulting from supply chain bottlenecks. Price pressures have also arisen due to increased transport and labour constraints, as well as shortages of goods. The prices of steel and electronic components, as well as transport costs, rose markedly during this period. Many companies have increased their selling prices, indicating a greater ability to pass on cost increases to customers in the face of high demand. Expectations for future price increases varied. Some expected the price to remain high or continue to rise, while others expected prices to fall over the next 12 months.

Jozef Kovach,
Analytical expert of InstaForex
© 2007-2025
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