In its latest formal economic report released Wednesday, the Cleveland Fed said businesses "widely reported" shortages of workers and, as a result, offered raises that were slightly above inflation.
The Cleveland Fed's territory covers all of Ohio, western Pennsylvania, eastern Kentucky and a sliver of West Virginia. The Cleveland Fed is one of 12 districts that reports on economic conditions eight times a year in its Beige Book reports.
"Overall wage trends were comparable to those of recent survey periods," the Fed said. "In every industry, contacts noted that increased competition was requiring their firms to boost wages to retain workers. Yet a number of contacts speculated the raises were not likely sufficient to stem worker turnover."
Companies in many sectors report a lack of qualified workers, such as those with trade certifications, commercial driver's licenses or skills needed in factories. And for years, companies have said they're desperate for applicants who can pass drug tests.
In its previous economic report, the Cleveland Fed said many companies have bolstered training to compensate for worker shortages, while also increasing wages, bonuses and incentives to reduce turnover.
Despite that, hiring was moderate, as it's been in recent months.
Manufacturing increased to "keep up with strong demand," the report said. In another sector, however, retail demand was flat after nearly a year of growth.
Prices continued to rise, though not as widely as in the last report. The Fed cited increases for LED lighting, concrete, steel, lumber and copper. At least some of this stems from increases in import tariffs, the report said.
The economic activity in Cleveland was in line with what was seen in much of the nation.
Most of the 12 Fed districts saw modest-to-moderate growth. Manufacturers said they had moderate growth in output. Many districts said companies had problems finding qualified workers and were unsure about the trade environment.
In other highlights of the Cleveland Fed report:
Car dealers say sales of new vehicles have dropped slightly because interest rates and prices have increased. "As a result, buyers have shifted somewhat toward used vehicles," the report said.
Manufacturing demand was strong, particularly for automotive, agriculture and construction equipment. Meanwhile, steel and heavy equipment manufacturers said demand had dropped slightly.
Homebuilders said demand dropped modestly. Those in the industry said the housing inventory is stable and demand from first-time homebuyers remains healthy.
Banks reported reduced demand for loans from businesses and some increase in commercial real estate and mergers and acquisitions. Separate from the Fed report, KeyCorp Chairman and CEO Beth Mooney said in an interview last week that interest rates are affecting commercial and mortgage lending. But she said that, overall, "Confidence is very high."
Business consultants and IT firms said they're seeing "stronger demand" because clients are seeing increased revenue, tax savings and increased budgets.
©2018 The Plain Dealer, Cleveland
Visit The Plain Dealer, Cleveland at www.cleveland.com
Distributed by Tribune Content Agency, LLC.