Benign Labor data of course look at the end of the pipe.
You have to look upstream the pipe at the forthcoming PPI index next
Wed to get the real picture.
A very interesting observation is that The Dow Transports Index
has NOT confirmed the Dow rise: DTI is heading decidedly south.
Maybe they know something we don't.
Anyway the Wall St. Jour yesterday reported on Page A2 that in Dallas
truck drives are so scarce that in one firm their trucks are standing still.
Buy more NEM today for Wed 10 fireworks,
Below is a better review of Labor and costs from the unbiased Wall St Jour
which does not have Marx's picture
hanging in the press room like in the Labor Dept.,
TA
------------------
November 4, 1999 Page A2
Fed Survey Finds Pressure Building
On Wages and Prices in the U.S.
By SARAH LUECK
Staff Reporter of THE WALL STREET JOURNAL
WASHINGTON -- The economy is showing some signs of slowing, and
reports of mounting wage and price pressures are spreading, according to
the Federal Reserve's latest regional economic survey.
Eleven of the Fed's 12 district banks reported in the most recent
beige-book survey that persistently tight labor markets are prompting
wage increases in selected fields and regions.
Overall, price inflation was subdued, but several regions reported rising
prices on specific items. The Dallas district reported a high cost for
memory chips, while the prices for paper and construction materials were
up in the Minneapolis district. The Atlanta, Chicago and Minneapolis
districts saw rising health-care costs.
Fed Faces Dilemma on Rates
The survey heightens the dilemma the Fed faces when policy makers meet
to consider interest-rate policy on Nov. 16. The anecdotes on emerging
wage and price pressures could be invoked by officials who argue that a
rate increase is justified, even if there's little evidence of widespread
inflation. But recent signs of a slowing economy would seem to argue that
those pressures will soon recede and that a tighter monetary policy isn't
necessary.
Jay Feldman, an economist at Credit Suisse
First Boston, has maintained that the Fed will
hold interest rates steady.
"Will this survey change anybody's mind at the
Fed? I don't think so," Mr. Feldman said.
"This is not an aggressive Fed at this point."
All regions reported labor shortages, with
temporary employees among the hardest to find. In New York,
"effectively, there are no more temps," said one contact. A staffing-service
firm in the Chicago district, the region where the labor market is reportedly
the tightest, said wages were up 10% to 12% "across the board since
July," causing the company to pass on higher costs to new customers.
Short-Staffed Businesses
In the Dallas district, entry-level retail turnover is 200% to 300%, and
truck drivers are so scarce that one firm's trucks are standing idle. A
short-staffed contact in the Atlanta district reports morale and productivity
problems, because employees are working excessive overtime hours,
though overall the Atlanta district reported few incidents of accelerating
wage pressure.
A technical-training center in Columbus, Ohio, said retirees now make up
a large share of its computer-education classes, as rising wages encourage
them to re-enter the job market. Labor costs "may be accelerating
somewhat" in the Boston district, with manufacturers offering attractive
recruitment packages and slight wage increases, and retailers raiding other
businesses for employees.
However, even the widespread labor
shortage is not consistent. The New
York and Dallas districts reported an
easing demand for skilled technical
workers, since year 2000 projects
are largely completed. In the
Philadelphia district, hospitals and
health-services firms have laid off
workers, and fewer requests are
coming in for manufacturing labor in
the Chicago and Kansas City
districts.
In almost all industries and districts, manufacturing was growing. The San
Francisco Fed reported continuing improvements in high-technology
equipment manufacturing. In the Boston district, most suppliers to the
semiconductor, telecommunications, biotech and construction industries
were experiencing double-digit increases in revenue. The Atlanta district
reported that shipyards in Louisiana are operating at full capacity.
In the agricultural sector, the harvest was good, but earnings were offset
by low prices. Droughts diminished the crop in the Dallas, Richmond, Va.,
and St. Louis districts, while hurricanes brought much-needed rains to the
East Coast.
Most regions saw an increase in overall loan demand, though the
Cleveland, New York, Richmond and Chicago districts reported softening
demand for consumer loans. In the Richmond district, business expansion
and anticipation of higher interest rates were fueling commercial lending.
Many of the districts reported steady to strong retail spending and robust
real-estate activity and construction, with the Kansas City district reporting
diminished retail activity. Sales of automobiles were strong in the Dallas,
Kansas City and Philadelphia districts, with weaker demand for them in
the Chicago district.
Separate economic reports Wednesday echoed recent signs of a
moderating economy. The Index of Leading Economic Indicators fell 0.1%
to 107.9 in September, after remaining flat in August, according to the
Conference Board. A board economist attributed the decline to severe
weather and uncertainty over interest rates.
September factory orders came in below expectations, dropping for the
first time since April, by 0.9%, the Commerce Department reported. |
