Fri, Mar 08, 2019 - Page 10 News List

Global slowdown weighing on US manufacturers: Fed

AFP, WASHINGTON

US manufacturers are increasingly worried that trade spats and other factors would dampen their growth prospects, while widespread worker shortages are hampering industries nationwide, the US Federal Reserve said on Wednesday.

Even though manufacturers have reported solid growth in recent weeks and the US economy has continued to turn in respectable albeit slower performance, the Fed’s “Beige Book” survey added more evidence that concerns are building.

US President Donald Trump’s aggressive trade policies, Brexit and other issues are showing signs of hitting global growth.

Meanwhile, wage increases are becoming more widespread as companies compete to fill open positions, although prices “continued to increase at a modest-to-moderate pace” as companies seeing higher input costs still cannot consistently pass them along to consumers, the report said.

New York Federal Reserve Bank President John Williams said in a speech on Wednesday that the US economy would “slow considerably” this year to about 2 percent as the boost from last year’s economic stimulus fades.

Many of the Fed’s 12 regional banks said that manufacturing activity remained solid or rose and the San Francisco Fed cited a steel manufacturer in Oregon that “noted strong activity in the industry due to lower competition from abroad arising from trade policy actions.”

However, “numerous manufacturing contacts conveyed concerns about weakening global demand, higher costs due to tariffs and ongoing trade policy uncertainty,” the Fed said in the report, prepared in advance of the monetary policy meeting on March 19 to March 20.

Moreover, in spite of Trump’s goal to reduce the US trade imbalance, the US merchandise trade deficit soared last year to its highest level ever, while goods deficits with China, Mexico and the EU likewise hit records.

The Cleveland Fed laid out factors weighing on demand and the growth outlook, including “slower global growth — particularly in Europe and China,” as well as “continued uncertainty about the future of tariffs on steel and aluminum and ongoing US-China trade negotiations,” and “decreased consumer confidence.”

Meanwhile, tight labor markets continue to serve as a brake on expansion throughout the nation and that is obliging companies in many areas to raise wages and other benefits for low-skilled and high-skilled workers, the report said.

“Labor markets remained tight for all skill levels, including notable worker shortages for positions relating to information technology, manufacturing, trucking, restaurants and construction,” the report said.

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