U.S. railroads scrambled to add workers, a Midwest trucking company turned down new business for lack of drivers and manufacturers say they can't buy enough cement, scrap steel and other materials to fill their orders. Yet retailers complain of sagging sales, and car dealers struggle to trim bloated inventories.
San Francisco reports a labor shortage. South Dakota reports layoffs.
As analysts wonder whether the nation is entering a lull or a period of sustained growth, the latest report from the Federal Reserve presented a mixed picture of an economy that continued to expand, but in uneven ways, with scattered production and transportation bottlenecks in areas where growth was strongest, and pockets of weakness elsewhere.
The report released yesterday, known as the "Beige Book," compiles anecdotes from businesses around the country and was put together to help Fed officials get a more vivid sense of the economy as they prepare for their next policymaking meeting.
Overall, the regional vignettes supported Fed Chairman Alan Greenspan's recent public comments that economic activity appears to have rebounded somewhat this month, even though businesses continued to be cautious in its hiring and investment plans.
With overall retail price increases "moderate," the report supports analysts' widespread expectations that the Fed will raise its benchmark overnight interest rate to 1.50 percent from 1.25 percent at the next meeting, scheduled for Aug. 10.
One sign that the economy is strengthening came in the Commerce Department's report yesterday that new orders for big-ticket items such as cars and appliances rose 0.7 percent in June, the first increase in three months.
However, many companies complained that rising demand for some goods was outstripping their ability to acquire and move the material they need for production, according to reports from the 12 regional Federal Reserve districts.
In the St. Louis and Kansas City districts, for example, companies complained of delays in coal shipments because of crowded railroad lines. Scrap steel shortages remained a concern in the Dallas district, with companies saying that demand from domestic steel mills is making up for a recent decline in China's appetite. Companies reported scattered cement shortages across the country, with some businesses saying that ships normally used to import the product are occupied shipping steel.
Factories in many non-auto industries hummed in recent weeks. The Minneapolis Fed reported that a bathtub maker is running three shifts a day, six days a week because of strong sales. A chemical company plans to double its manufacturing capacity at a Minnesota plant, and a watercraft maker plans to expand production.
The Fed does not identify individual businesses, but engine-maker Cummins Inc. reported high demand for its products as businesses invested in new equipment and trucks, Bloomberg News reported.
Auto inventories grew as dealers tried in June to reduce rebates and other incentives that customers have come to expect. Although sales appear to have perked up with renewed incentives in July, auto production in the Midwest is below levels of a year ago, and one St. Louis district manufacturer plans to shut some plants to reduce inventories.
The overall employment picture continued to improve, though it varied greatly by occupation and region, and wage gains remained modest.
The San Francisco district, which includes much of the West Coast, reported shortages of skilled workers in a number of industries, including construction, manufacturing, financial services and technology services.
A St. Louis district aerospace company plans to train former autoworkers. Nurses in the Minneapolis area are getting wage increases.
Truckers are in high demand across the country, commanding higher wages in some places.
But staffing companies in the Philadelphia district said most of their clients are adding workers only as "staffing needs become pressing." The Cleveland district said "few firms reported any significant hiring plans for the remainder of 2004."
Some areas also reported plant closings and layoffs. A call center in North Dakota will close at least temporarily in August, while a computer plant in South Dakota was closed in June.
Most districts reported strengthening labor markets, with some of the best conditions found in the New York, Atlanta, Chicago, Minneapolis and Richmond districts. Richmond includes the Baltimore-Washington area. The weakest job reports came from the Boston, Cleveland and Dallas districts.
Although many companies complained about having to pay more for energy, metals, food, transportation and other goods and services, competition continued to generally constrain their power to raise the prices on their products and services, the report said.
Overall retail price inflation "was typically reported to be moderate," it said, which means Fed officials can keep to their plan of raising short-term interest rates gradually in coming months.
Residential real estate continued to boom as many buyers appeared to be acting in anticipation of rising interest rates, even as mortgage refinancing has dropped off steeply. Commercial real estate remained generally weak, the report said.
One continuing bright spot since the spring has been travel and tourism, particularly in New York City, Florida, California and Hawaii.
Broadway theaters reported that business was booming in June and early July, with revenue about 12 percent above last year, the report said. "Virtually all of the increase reflects higher attendance, while the average ticket price was little changed," it said.