"Inflation Is Killing My Business" - Kansas City Fed Survey Slumps To Lowest Since COVID Lockdowns
Continuing the trend of dismal regional Fed survey data, Kansas City's Manufacturing sentiment slumped to -10 in April (from 0.00 with expectations of a small drop to -2).
Source: Bloomberg
The decline was driven more by nondurable goods plants, especially printing, plastics, paper, and food manufacturing.
All month-over-month indexes declined, except for the raw materials prices, finished product prices, average employee workweek, and supplier delivery time indexes.
While the headline data is bad enough, the comments are much scarier:
“We need an incentive for people to work. We have 10% increases or more in the cost of materials. We have 7% increases in cost of labor when available. We have raised prices 5% - can't do more. Hard to make money this way.”
“Inflation still a big problem in our little corner of the world. Some commodities are better and some are still a problem. We likely are looking at another round of significant price increases in the short to medium term.”
“We are seeing a little slow down of sales on certain types of consumer products, so have become a little conservative in our production plans for 2023 and the first quarter of 2024.”
“Labor availability is the biggest challenge we are facing.”
“Inflation is killing my business - everything is up and hard to get my price increases passed along to customers. Employees are very hard to find.”
“We are seeing some softening in our industry. The size and frequency of new orders from current customers seems lower and new business orders are definitely smaller based on the scale of the new customer's operations and typical requirements.”
Not a pretty picture but it's what Powell wants and it fits with continued weakness in growth and no weakness in inflation (stagflation) that this morning's GDP hinted at.
