Reply To: Traders Market Weekly: Neutralizing Contagion


Tenth District manufacturing activity Special Questions

This month contacts were asked special questions about profit margins and changing prices. In March, given current price pressures, 56% of firms reported a decrease in profit margins since the beginning of the year, while 26% of firms reported no change, and 18% of firms reported an increase (Chart 2). Compared to last year, 47% of firms reported changing prices more often, 28% of firms reported no change, and 24% reported changing prices less often (Chart 3).

Selected Manufacturing Comments
“For us in our little corner of the world inflation is still a huge issue. Some commodities are leveling off – but some are still very high and projected to go higher. Freight seems better. Access to labor is a little better. We will have to continue to appropriately raise prices throughout the year to try and build back profit margins.”

“Salaries and benefits have increased significantly over the past two years. Price increases have offset that. We need demand to stay strong, so prices stay in place. Increased capacity is being built internationally, which will impact demand in the long term.”

“Supply chain and labor costs are our biggest concerns.”

“Material and equipment availability is not getting better. I thought it would by now, but it’s not. Not sure when that will change…if ever.”

“The two most common issues are related to supply chains from importing from China, delays, or supply and tightness of labor.”

“We are beginning to see some relief in the base commodity inputs – soybean oil, eggs, cardboard, etc. are starting to come down.”