Super-charged inflationary pressures continued to gain steam in June, the Philadelphia Fed’s manufacturing survey showed Thursday.
Eighty-two percent of manufacturing companies in the Philly Fed’s survey reported paying higher prices for the inputs of their products, while just one percent said costs of input had fallen. As a result, the diffusion index moved up four points to 80.7, the highest reading since June 1979.
Many of those companies are succeeding in passing on at least some of those higher costs to customers. Over 51 percent of the firms reported increases in prices received this month (up from 43 percent last month), while only 2 percent reported decreases (the same as last month). The current prices received index rose for the fourth consecutive month, moving up 9 points to 49.7, its highest reading since October 1980.
Seventy-six percent said they think prices paid for input will continue to go higher, 5.4 percent said they thought they would pay less for inputs six months from now. A very large share of firms, 76.4 percent, said they expect to be able to charge more for their products six months from now, while just 8.5 pecrent foresee declines.
Sixty-nine percent of manufacturing businesses said labor supply was constraining current output. Eighty percent said supply chain issues were holding them back
The survey indicates that manufacturing continued to grow in June, although the indexes for new orders, unfilled orders, and inventories fell. This suggests that high inflation is weighing on output.
The report covers the Philadelphia Fed’s home territory of over 13.3 million people in Delaware, southern New Jersey, and eastern and central Pennsylvania.