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The beige book reveals that the recent economic activity in the United States has increased gently, and the supply chain problems still exist under the economic recovery. On March 2 local time, the Federal Reserve economic beige book was released. This beige book counts the economic situation of 12 jurisdictions. The survey date is as of February 18. According to the beige book, since mid January, the overall economic activities of the 12 jurisdictions began to expand gently, but the specific performance was differentiated due to industrial and regional differences. By industry, the hotel industry is still under great pressure due to the impact of Omicron epidemic; The demand of manufacturing and construction industries began to increase, but the shortage of raw materials and the pressure on inventory have not been solved; Agriculture and energy sectors benefited from the recent high commodity prices, and the market performed well, but some jurisdictions said that output was affected by bad weather. Compared with the last published beige book, the recent situation of the U.S. economy has not changed significantly, and it is still growing slowly. From the economic data, in January, the main economic indicators basically met or exceeded the expected level, and some data in February were negatively affected by the intensification of the geographical conflict between Russia and Ukraine. From the perspective of demand, personal expenditure in the United States increased by 2.1% month on month in January, exceeding the expected 1.5%, an increase from – 0.6% last month, and terminal demand is still strong. In terms of supply, the rate of inventory accumulation has also slowed down compared with previous months. It is worth noting that the manufacturing industry made a great contribution to the recovery of the US economy in January and February, and the recovery of relevant economic activities in this field basically exceeded expectations. According to the latest ism manufacturing index of the United States, the United States reached 57.6% and 58.6% respectively in January and February, which is in the expansion range. Among them, the new order index increased by 3.8 percentage points to 61.7% month on month in February, and the production index increased by 0.7 percentage points to 58.5% month on month in February. Both data have expanded for 21 consecutive months and continue to expand; The supplier delivery index increased by 1.5 percentage points to 66.1%, while the order backlog index increased by 8.6 percentage points to 65%, which is the 20th consecutive month of expansion of order backlog and increased at a faster rate. The two data reflect that the production capacity of American suppliers is still lower than its maximum potential, which is difficult to meet the continuously rising demand in the manufacturing industry, and the supply chain crisis has not been solved.
The job market has not changed much, and the problem of labor shortage still exists. From the statement of employment in the beige book, although the employment market continues to recover in recent two months, the high absenteeism rate still plagues most enterprises, and more enterprises are forced to adopt high salary and welfare to attract workers. Although the recruitment difficulty caused by the rapid spread of Omicron virus mentioned in the last Beige Book has been alleviated in some areas, the labor cost is high Large liquidity and unstable structure still exist. In terms of data, the US unemployment rate rose 0.1 percentage point month on month to 4% in January, basically in line with expectations. In January, the number of new non-agricultural employment in the United States reached 467000, a new high in recent three months. Compared with the increase of 190000 in the previous month, it continued to expand, of which 440000 were contributed by the service industry. In terms of structural changes, the total number of new jobs in manufacturing and mining decreased by nearly 60000; The new population in retail and transportation and warehousing increased by 50000; Leisure, hotel and business services remained the areas with the largest number of new jobs, creating 151000 and 86000 jobs respectively. In February, ADP employment increased by 475000, significantly exceeding the expected 388000, and the previous value decreased by Shanghai Hajime Advanced Material Technology Co.Ltd(301000) . In terms of labor cost, due to the labor shortage caused by Omicron related leave absence, American enterprises represented by Amazon continue to raise wages to attract labor. Data show that the weekly payroll index of U.S. Non-agricultural enterprises rose to 167 in January from 166.1 last month, with the most significant increases in information industry, professional and business services, education and medical industry. In January this year, the number of small enterprises relying on salary increases to attract labor accounted for 50% of the total, which increased by two percentage points over the previous month, reaching a record high. In addition, the labor shortage in medical, catering and other service industries is more serious.
There is a global shortage of raw materials and prices have risen significantly. In this beige book, there are 54 references to soaring prices, with a significant increase in frequency compared with the last time (31 times), of which the increase in labor costs and the high price of raw materials are the main reasons. Recent geopolitical problems have led to a shortage of global raw material supply, pushing up global commodity prices and inflationary pressure. Taking oil as an example, due to the tension caused by the conflict between Russia and Ukraine and the refusal of OPEC + to increase production, oil prices have continued to soar rapidly since January. The “two barrels of oil” broke 100 at the end of February respectively, rising to $106 and $110 from $75 / barrel (WTI crude oil) and $79 / barrel (Brent crude oil) in early January. Us CPI in January increased by 7.5% year-on-year, 0.5% higher than the previous value, exceeding market expectations; Excluding food and energy prices, the core PCE price index increased by 5.2% year-on-year, higher than the previous value of 0.3%, also higher than expected, and increased by 0.5% month on month, which was in line with the previous value and expectation. On the supply side, inflation pressure is high due to the rise in the price of commodity processing raw materials; The PPI index increased by 9.7% year-on-year, exceeding the market expectation of 9.1%, of which the areas with large increase include mining, food processing and non-metallic manufacturing. In addition, the rise in labor costs is also a factor driving up inflation. The average hourly salary of us non-agricultural employees in January was US $31.63, an increase of US $0.23 over the previous month, rising for 20 consecutive months.
Inflation and employment pave the way for the fed to raise interest rates. Overall, the US economy continues to recover, but it is still affected by high inflation, supply chain problems and labor shortage. With the strong growth of new orders and backlog orders and the improvement of Omicron infection rate in individual states, the crisis in the supply chain of U.S. manufacturing industry in March and April is expected to be eased appropriately, and the service industry is also expected to recover gradually. The Fed’s interest rate meeting held from March 15 to 16 will attract much attention. At this meeting, the Fed is facing a more severe form: on the one hand, the high price of China’s supply side, on the other hand, the economic sanctions brought by the situation in Russia and Ukraine and its increasing spillover impact. On March 2 local time, Fed chairman Powell said at the hearing of the Financial Services Committee of the house of representatives that it would be “appropriate” for the fed to raise the target range of the federal funds rate at the monetary policy meeting in March, and was inclined to propose and support an interest rate increase of 25 basis points. With high inflation expected, but geopolitical and other uncertainties still exist, the Fed will not release too hawkish actions or raise interest rates by 25 basis points at the interest rate meeting in March.
Risk tip: crude oil price fluctuates sharply and the demand is lower than expected
