Manufacturing activity in Arkansas has "strongly increased" over the past month and service and transportation sectors also have seen increased spending, according to a Federal Reserve Bank report released Wednesday.
"An Arkansas transportation contact reported revenues exceeding pre-pandemic levels due to increased demand, although a shortage of parts for needed repairs has been an issue," said the Fed's Beige Book, which examines national economic trends. It also examines Arkansas and six other states in the St. Louis region.
Overall, Arkansas has shown some modest growth though supply-chain bottlenecks, hiring challenges and home prices rising sharply could create problems going forward, said Nathan Jefferson a regional Fed economist.
"We're seeing some positive economic improvement," Jefferson said Wednesday. "We did hear though there was a little slowdown on spending on goods." There appears to be a shift with consumers moving away from spending on goods to spending more on services from March to April.
Managers in the Arkansas hospitality sector note spending is up, Jefferson said.
Yet most industries continue to report supply chain slowdowns and a lack of workers to fill jobs. "The supply chain and tight labor market continue to be on-going issues," Jefferson said.
The housing market remains strong though the fed says it will keep an eye on the effect of rising interest rates. "Despite climbing interest rates since our previous report, home buyers have remained undeterred," the report said. "Demand has held strong; inventory has fallen and remains around 25-30% lower than this time last year in the district's major (metro areas)."
On the commercial real estate front, an Arkansas builder reported "the shortage of skilled labor coupled with shipping delays is hampering project completion."
Prices continue to rise across the board, with gas soaring and key construction materials increasing substantially. The Fed reported lumber prices are once again at record highs after declining in the second half of last year.
Builders are reporting a surge in steel prices. Construction suppliers have several planned price increases for the near future; increases range from 6% for roofing materials to 75% for glass fiber felt sheets.
Some suppliers and trucking companies are adding fuel surchargers or delivery fees to orders, which most contacts are passing on to consumers. Agriculture contacts noted higher fuel and fertilizer costs, which will be passed on to consumers. A contact in the restaurant industry reported that chicken and butter prices have increased since the beginning of the year.
Manufacturing remains solid with "strong upticks in new orders and production," the Beige Book said. "Demand has continued to remain strong despite significant price increases, exceeding production capacity and creating order backlogs. Some firms are concerned demand may soon soften due to these continued price increases."