AIRLINK 62.08 Decreased By ▼ -0.40 (-0.64%)
BOP 5.34 Decreased By ▼ -0.02 (-0.37%)
CNERGY 4.49 Decreased By ▼ -0.09 (-1.97%)
DFML 15.37 Decreased By ▼ -0.13 (-0.84%)
DGKC 65.74 Decreased By ▼ -0.66 (-0.99%)
FCCL 17.75 Increased By ▲ 0.16 (0.91%)
FFBL 27.51 Decreased By ▼ -0.19 (-0.69%)
FFL 9.33 Increased By ▲ 0.06 (0.65%)
GGL 10.03 Decreased By ▼ -0.03 (-0.3%)
HBL 104.67 Decreased By ▼ -1.03 (-0.97%)
HUBC 121.07 Decreased By ▼ -1.23 (-1.01%)
HUMNL 6.55 Decreased By ▼ -0.05 (-0.76%)
KEL 4.47 Decreased By ▼ -0.03 (-0.67%)
KOSM 4.51 Increased By ▲ 0.03 (0.67%)
MLCF 35.83 Decreased By ▼ -0.37 (-1.02%)
OGDC 122.40 Decreased By ▼ -0.52 (-0.42%)
PAEL 22.77 Decreased By ▼ -0.23 (-1%)
PIAA 31.54 Increased By ▲ 2.20 (7.5%)
PIBTL 5.78 Decreased By ▼ -0.02 (-0.34%)
PPL 107.00 Decreased By ▼ -0.50 (-0.47%)
PRL 27.23 Decreased By ▼ -0.02 (-0.07%)
PTC 18.33 Increased By ▲ 0.26 (1.44%)
SEARL 52.50 Decreased By ▼ -0.50 (-0.94%)
SNGP 62.81 Decreased By ▼ -0.40 (-0.63%)
SSGC 10.60 Decreased By ▼ -0.20 (-1.85%)
TELE 9.18 Decreased By ▼ -0.02 (-0.22%)
TPLP 11.28 Decreased By ▼ -0.16 (-1.4%)
TRG 70.00 Decreased By ▼ -0.86 (-1.21%)
UNITY 23.65 Increased By ▲ 0.03 (0.13%)
WTL 1.27 Decreased By ▼ -0.01 (-0.78%)
BR100 6,927 Decreased By -16.6 (-0.24%)
BR30 22,682 Decreased By -145.2 (-0.64%)
KSE100 67,040 Decreased By -101.8 (-0.15%)
KSE30 22,052 Decreased By -37.7 (-0.17%)
Business & Finance

US business optimism wanes over tariffs, rate hikes: Fed

WASHINGTON: US business optimism has fallen in recent weeks amid uncertainty over tariff disputes, rising interest r
Published December 5, 2018

WASHINGTON: US business optimism has fallen in recent weeks amid uncertainty over tariff disputes, rising interest rates and continued labor shortages, the Federal Reserve said Wednesday.

The Fed's "beige book" survey of the economy showed the impact of President Donald Trump's punitive import tariffs has become more widespread, with cost increases felt by manufacturers, retailers and restaurants, restraining demand.

Even so, most regions of the US showed modest or moderate growth, and there were continued reports of companies increasing wages and benefits to attract and retain qualified workers, the report said.

"Most districts reported that firms remained positive; however, optimism has waned in some (districts) as contacts cited increased uncertainty from impacts of tariffs, rising interest rates, and labor market constraints," the Fed noted.

Trump has imposed steep tariffs on steel, aluminum and about $250 billion in imported goods from China, which has retaliated with tariffs on US goods. Washington and Beijing have agreed to negotiate a deal to resolve the dispute, but that could take another three months.

Wage increases -- added to rising costs in more industries due to US tariffs on steel and aluminum and hundreds of billions of dollars in imports from China -- could become a concern for the central bank as it works to head off inflation without slowing economic growth.

But the outlook reflected in the report has not changed much in recent months, and provides few signs that the expected increase in the Fed's benchmark lending rate in December might be postponed.

- 'Pain point' -

The report was prepared for the Fed's monetary policy meeting on December 18-19, which is expected to end with the fourth rate increase this year and the ninth in three years.

"Higher metals prices because of import tariffs continue to be a pain point for manufacturers and construction firms," the Cleveland Fed bank said.

"There were a number of reports of tariffs leading to higher prices further down the supply chain," including to retailers.

And several regions reported businesses were beginning to raise prices as their costs increase.

"Looking ahead six months, manufacturing firms continued to anticipate higher prices, with nearly 60 percent of the firms expecting increases in prices paid and in prices received for their own goods," the Philadelphia Fed said.

At the same time, businesses nationwide say they are having trouble filling open positions, which in some cases has forced them to postpone expansion plans.

The Chicago Fed cites the growing problem of keeping existing workers.

"A number of contacts said that they had been 'ghosted,' a situation in which a worker stops coming to work without notice and then is impossible to contact."

Meanwhile, four of the 12 Fed districts reported slow or virtually no growth in October and November. If that pattern spreads, the central bank could be faced with trying to control rising prices amid slowing growth.

So while a December rate increase is expected by most economists, what the Fed will do next year is increasingly in doubt -- and many analysts have cut their forecast down to just two or three next year.

Copyright AFP (Agence France-Press), 2018
 

Comments

Comments are closed.