Business activity in the Mid-Atlantic region of the country expanded at a slower rate in December, according to new data from the Federal Reserve Bank of Philadelphia. Specifically, the general business conditions index fell from 12.9 to 9.4 this month, significantly worse than anticipated, the largest 2-month drop since May 2016, and the lowest headline reading in more than two years. Most of the weakness was due to a sharp drop in shipments, while measures of new orders, profit margins, and employment all improved in December.
In the special questions section of this month’s survey, manufacturers were asked about their expectations for changes in various input and labor costs in 2019. Respondents on average see wages rising by 2.8 percent in the year ahead, while healthcare benefits are expected to increase 4.5 percent. Similarly, a report released by the New York Fed revealed that businesses in the northeast region of the country anticipate workers’ wages lifting by 3.9-4.2 percent in 2019, along with a 5.2-6.3 percent jump in benefits costs. Businesses were also asked about their outlooks for selling prices next year, and managers on average see customers paying 2.8-3.2 percent more in 2019, a moderate acceleration compared to the year-ahead expectations reported in last December’s survey.
Sources: Econoday, FRBP, FRBNY
Post author: Charles Couch