Many sources report steep price increases; output, job growth appear widespread

Materials prices continue to dominate the economic news. The Energy Information Administration reported recently that the national average retail price of on-highway diesel fuel rose 3 cents this week to $1.68. The average in California jumped 15 cents to $2.16, following a 12-cent spurt last week.

Under the headline, “Price Increases in Asia Fan Inflation Fears in U.S.”, today's Wall Street Journal (p. A1) reports, “raw materials, including scrap steel and copper, are double or more what they were 18 months ago ... cobalt - a metal used to make electrodes in [lithium] batteries - soared to about $25 a pound from $7 a pound in 2002 ... a 70% rise in rubber prices in the last 18 months.”

Saturday's New York Times reported, “Prices of both oriented-strand board and plywood reached records this week.” Regional business publications around the nation quoted local contractors facing 100% and greater price increases for different construction steel products.

The Institute for Supply Management (ISM) reported that its monthly survey of more than 370 nommanufacturing purchasing managers found a record number of items up in price. Construction inputs included aluminum; asphalt; conduit and fittings; copper products including pipe, cable, tubing, and wire; diesel fuel; freight charges; lumber; plywood; PVC pipe and fittings; roof felt; safety equipment; and many steel products. Commodities reported in short supply included several steel items.

The ISM business activity index in March was at the highest level in its seven-year history, one of several recent reports that the overall economy is strong. Of 17 nonmanufacturing sectors in the survey, none was down and 15 were up. Construction was one of five industries reporting the highest rates of business activity, inventory increases, and price increases, and one of seven with the highest rates of growth of new orders. But construction also was one of four reporting reductions in employment and was listed first among five sectors reporting the highest rates of feeling that their inventories were too high.

Other signs of strong economic growth included strong chain-store sales and manufacturers' optimism in March and a Census report of a 1.3% gain in wholesale sales in February. Indexes of same-store sales at several dozen chains compiled by the International Council of Shopping Centers and by Lazard both showed near-record results, with nearly every large chain (except Kohl's) reporting favorable comparisons to March 2003.

Economic growth appears to be widespread geographically, but not universal. Two-thirds of 274 metropolitan areas added payroll jobs in the year ending in February, the Bureau of Labor Statistics reported. “The largest over-the-year employment increases were posted in Washington, D.C.-Md.-Va.-W.Va. (+54,900), Phoenix-Mesa, Ariz. (+37,200), Las Vegas, Nev.-Ariz. (+35,600), Riverside-San Bernardino, Calif. (+22,200), Orlando, Fla. (+17,400), and Tampa-St. Petersburg-Clearwater, Fla. (+16,200). The largest over-the-year percentage increases in employment were reported in Bloomington, Ind., and Las Vegas, Nev.-Ariz. (+4.4% each), La Crosse, Wis.-Minn. (+4.2%), McAllen-Edinburg-Mission, Texas (+4.1%), and Benton Harbor, Mich., and Green Bay, Wis. (+4.0% each). The largest over-the-year employment decreases were reported in Detroit, Mich. (-43,100), Boston, Mass.-N.H. (-23,300), San Jose, Calif. (-21,300), Denver, Colo. (-20,000), San Francisco, Calif. (-18,500), and Oakland, Calif. (-15,700). The largest over-the-year percentage decreases in employment were reported in Enid, Okla. (-3.9%), Columbia, S.C. (-3.7%), Steubenville-Weirton, Ohio-W.Va. (-3.6%), Lawton, Okla. (-3.0%), and Omaha, Neb.-Iowa, Saginaw-Bay City-Midland, Mich., San Jose, Calif., Toledo, Ohio, and Tulsa, Okla. (-2.5% each).

Employment growth was most widespread in education and health services. Growth also was prevalent in leisure and hospitality, financial activities, construction, and professional and business services.” Population growth has been somewhat more concentrated than the BLS job growth figures indicate, according to a recent Census Bureau release on the nation's fastest-growing counties. “Half of the nation's 10 fastest-growing counties between April 1, 2000, and July 1, 2003, were located in Georgia. However, it was a Virginia county - Loudoun, near Washington, D.C. - that topped the list, with a 31% population increase over the 39-month period. According to the estimates, the fastest growing counties in Georgia were Chattahoochee, Forsyth, Henry, Newton and Paulding - all with growth rates above 20%. In all, the Peach State was home to 20 of the nation's 100 fastest-growing counties. Next were Texas (12 counties) and Florida (nine counties).”

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