The latest report from the Department of Labor shows that employees' salaries have recorded the largest quarterly increase since 2003.
Companies say raw material shortages and supply chain challenges are likely to last until 2022
Inflation continues to brew in the US industrial circle as increasing shortages of raw materials lead to longer delivery times and manufacturers unable to keep pace with the economic rebound.
Wage growth also began to have an impact when manufacturers tried to deal with commodity supply chain problems. According to the latest report from the Labor Department, corporate pay has seen its biggest quarterly increase since 2003.
Higher labour and raw material costs could lead to a rebound in consumer inflation at a time when monetary and fiscal policies are conducive to faster economic growth. Colgate brown oliveA growing number of companies, such as food and beverage maker Mondelez International and Kimberley, are raising the price of their products.
While Federal Reserve Chairman Colin Powell said the central bank sees raw material shortages and supply chain challenges as temporary, companies say the challenge is likely to last until 2022.
The Labor Department will release April inflation data on Wednesday.
The following figure shows the latest developments in raw material shortages, delivery times and wages:
Longer delivery times are one of the clearest signs that manufacturers are facing supply chain challenges. According to the latest data from the Institute for supply Management, the waiting time for production materials increased to 79 days in April, the longest since records began in 1987. In ISM data, the average delivery time of consumables such as maintenance, repair and operation is also the longest on record.
This delay led to a record backlog of orders and limited production growth.
ISM's monthly report also shows that more and more commodities are in short supply. In November last year, purchasing managers listed only eight raw materials that were difficult to obtain, but five months later, the number increased to 24.
Although personal protective products and gloves have been in short supply for months, products such as aluminum, wooden pallets and rubber products are new and scarce.
At the same time, as the lifting of epidemic prevention restrictions leads to a wide expansion of economic activity, the largest cost (labor force) of enterprises is accelerating.
Private sector wages rose the most in 18 years in the first quarter, according to the government's latest employment cost index, a quarterly measure of pay.
Most economists prefer the employment cost index because, unlike the average hourly wage in the monthly employment report, the wage data is not distorted by changes in the composition of employment that are particularly severe during the epidemic. The overall employment cost index, which includes government workers, posted the biggest increase since 2007.
Despite the high unemployment rate, many companies have mentioned the difficulty of finding qualified workers.
More and more vaccinations are also causing more Americans to go back to their favorite restaurants or travel again. For service providers, this means hiring more workers.
But attracting workers has been a challenge, possibly because of the continuing demand for childcare and increased unemployment benefits.
These factors may help explain the sharp rise in wages for service workers in the first quarter. The 1.3% increase was the biggest quarterly increase since records began for two decades.