Inflation pressures keep rising
More signs of inflation are popping up in U.S. data and economic reports, suggesting the rising inflation expectations of both consumers and investors are starting to play out in the economy.
Driving the news: The NFIB's latest small business jobs report showed the percentage of firms raising average selling prices increased to 25% in February, the highest since August 2008.
That backed the findings of a WSJ piece tracking larger firms that noted "companies across a range of industries are grappling with higher prices for commodities such as lumber and steel."
- The jump in commodities prices has pushed many U.S. businesses, like La-Z-Boy, the Container Store and Sleep Number, to increase prices to offset the costs, WSJ's Kristin Broughton reported.
Zoom in: NFIB's survey also found the number of businesses who said finding qualified labor was a challenge jumped, with 91% of those trying to hire reporting few or no “qualified” applicants for their open positions, up 5 points from January.
- 40% of small-business owners had job openings they couldn't fill in February — the largest share on record, dating back to 1973.
- That flies in the face of traditional supply/demand economics, considering the glut of unemployed workers, and could spell trouble for future employment trends.
What to watch: "The proportion of firms reporting that finding qualified labor is their biggest problem has now recovered most of the drop triggered by Covid, and both actual and expected employee compensation are rising," Pantheon Macroeconomics chief economist Ian Shepherdson said in a note to clients.
- "The labor market, in short, looks nothing like the wasteland seen after the crash of 2008, and the potential for wage inflation to rise as the economy recovers is much greater."
Of note: Despite the increasing inflationary inputs, today's consumer price index is expected to remain anchored below 2%, as major contributors like salaries and housing costs have been muted largely as a result of the pandemic.