Ninety-five percent of manufacturers in the Tenth District of the Federal Reserve report that they are experiencing supply chain disruptions and shortages, according to the Federal Reserve Bank of Kansas City.
The Kansas City Fed said on Thursday the share of manufacturers reporting supply chain disruptions and shortage in September had risen by six percentage points since July of this year, an indication that supply chain problems are worsening.
The data come from the Kansas City Fed’s monthly manufacturing survey, which covers goods producers in Colorado, Kansas, Nebraska, Oklahoma, Wyoming, and portions of western Missouri and northern New Mexico.
“Regional factory activity rose further,” said Chad Wilkerson, an economist at the Kansas City Fed. “Production and employment have continued to increase. However, more firms reported additional price increases and delivery time delays. Most contacts expected supply chain issues to be resolved within the next 6 to 12 months, but 36% of firms expected these issues to persist for more than 12 months.”
The monthly index of prices paid for raw materials posted a new survey record high in October, with 82 percent of manufacturers reporting that they paid more for materials than the month prior and just one percent saying they paid less.
Ninety-nine percent of firms continued to report higher input prices compared to a year ago, a tick down from September’s one hundred percent. Eighty-three percent said they expect to pay higher prices in six months, even with the prior month.
Fifty-one percent of firms say they raised prices on their finished product, a big jump from 44 percent in September. On an annual basis, 91 percent say they’ve raised prices, compared with 86 percent a month earlier. The share expecting to raise prices over the next six months jumped five points to 67 percent.
The share of firms reporting delaying projects and turning away business rose in the month. Firms are also increasing inventories. One-third said they were making capital or technological investments to combat supply chain problems.
Around 56 percent of 10th District manufacturers expected rising materials prices and lack of availability/delivery times to persist for 6 to 12 months, while 36 percent say they expect these issues to persist for more than 12 months. Only eight percent expected materials price increases and supply chain issues to be resolved within the next six months.