Business Activity Continued to Grow Moderately
Tenth District services activity continued to grow moderately, and activity was expected to expand further over the next six months (Chart 1 & Table 1). Indexes for input and selling prices remained high, but the pace of growth eased slightly from recent survey record highs. Input and selling prices remained above year-ago levels for most firms, and prices were expected to increase over the next six months.
The month-over-month services composite index was 14 in November, lower than 18 in October, but up slightly from 13 in September (Tables 1 & 2). The composite index is a weighted average of the revenue/sales, employment, and inventory indexes. Revenue and sales continued to be driven by increased wholesale, retail, and real estate activity. However, auto and tourism activity decreased again in November, and health services declined. Month-over-month indexes remained positive in November, indicating expansion. The wages and benefits index rose to a historic survey high (since 2014). Inventories inched up from a month ago and employee hours worked increased, while employment counts grew at a slower pace in November. The year-over-year composite index eased slightly from 26 to 21 but remained positive. Compared to a year ago, inventory levels rebounded somewhat. Year-over-year sales remained positive but did not grow as much as in recent months. Future services activity was expected to increase at a faster rate, and the future composite index rose from 22 to 28.
|Date||Vs. a Month Ago||Vs. a Year Ago|
This month contacts were asked special questions about employment plans and labor market conditions. Over 60% of firms expected to increase employment over the next 12 months, while 35% of firms expected to leave employment unchanged. 70% of firms reported high expected sales growth as one of the top three factors driving employment plans, and 95% of firms reported current staff being overworked as a top factor for future hiring plans (Chart 2). May firms also noted they need skills not possessed by current staff or that a better financial position has contributed to their plans to increase employment moving forward. Nearly 53% of firms reported they are already at or above their pre-pandemic employment levels from pre-March 2020 (Chart 3). 32% of firms expected to meet their pre-pandemic employment level by the end of 2022 and 10% expected employment to recover after 2022. On the other hand, 5% of firms did not expect to return to their pre-coronavirus pandemic employment levels.
Selected Services Comments
“[We are] adding new retail locations.”
“We can't keep up with demand.”
“The market remains strong for residential sales both in new and existing properties. The demand for duplexes and quads are increasing also.”
“Current employees are satisfied with current number of hours worked each week. [They are] not willing to accept more hours.”
“We are basically hiring enough folks to cover resignations, but not making a dent in the number of folks we have been short for most of the year or hiring up for the skills we need.”
“Workers are choosing other jobs besides restaurant and hospitality. Medical marijuana shops have employed many restaurant workers in our community.”
“There is a shortage of good employees who will work for what we can pay. Many leave for better paying jobs. Retirements are up as the technological requirements have accelerated. Many say it isn’t worth learning a new job to work a handful of years, particularly those over 62.”
“We are concerned about the vaccination mandate. Half of our workforce is not vaccinated.”
“As soon as we can find qualified workers, we will hire them. Scarcity of qualified workers is the only factor that is causing our need to increase employment.”
“Candidates are turning down work because they have multiple job offers.”
“People are hired and don't show up for work on the first day.”
“Hiring is getting better.”