Factories in New York are paying up for inputs needed to make their products and successfully passing along the higher costs to customers, a survey by the Federal Reserve Bank of New York showed Tuesday.
The prices paid and prices received indexes in the New York Fed’s “Empire State” manufacturing survey both hit record highs in May. In June, both indexes moved only slightly down from those highs.
Nearly 81 percent of manufacturers said they paid higher prices in June, down slightly from 83.5 in May. Nine-tenths of a percentage point said they paid lower prices, up from zero in May. A smaller share, 36.8 percent, said they were able to increase prices, down from 39.3 percent in May. Just 3.5 percent said their selling prices declined.
Expectations for inflation remain high. The share saying they expect to pay more for inputs ticked down to 70.2 from 70.5, with the share expecting lower prices inching up to 6.1 from 3.6 percent. The share expecting to charge more actually increased to 50.9, three points higher than May. Just 5.3 percent expect lower prices six months ahead.
In a separate report, the Department of Labor on Tuesday said that materials and components for manufacturing rose 2.4 percent in May. That is lower than the 4.1 percent in March and 3.9 in April, which were record highs in Producer Price Index data going back to 1973. Excluding those months, May’s reading was the highest since January of 1980.
Manufacturing activity grew solidly in New York State, the New York Fed’s survey indicated, although at a slower pace than in recent months.
There are also indications that manufacturers are having trouble hiring workers despite an 8.2 percent unemployment rate. Only 23.5 percent of manufacturing businesses reported a higher number of employees and 11.2 percent reported fewer employees. Nearly 45 percent said they anticipate adding workers over the next six months and just 3 percent anticipate smaller payrolls.
Many businesses have said they believe bonus jobless benefits are holding people back from accepting jobs.