Today’s Employment Report

Clearly tariffs continue to worry businesses across the US, as eleven out of twelve districts mentioned them in the latest report. Also of concern: ‘Most Districts reported that firms remained positive; however, optimism has waned in some as contacts cited increased uncertainty from impacts of tariffs, rising interest rates, and labor market constraints.’ Not dissimilar to this quarter’s market worries… Here’s some key examples of what they’re saying about each topic from the period of mid-October through late November:

Tariffs

• Boston: ‘An industrial distributor said they expected tariffs to contribute 50 to 100 basis points to price increases for their products… Looking ahead to 2019, retailers expressed significant uncertainty about the impact that tariff increases will have on prices–beyond some point, they will pass the increases on to consumers.’
• Philadelphia: ‘One firm reported that it has passed along its costs from 10 percent steel tariffs but that it expects customers to push back if the tariffs increase to 25 percent.’
• Cleveland: ‘Contacts noted that tariffs were lifting prices further down the supply chain. Selling prices rose with less intensity than they did for input costs.’
• Richmond: ‘Wholesale and retail services saw higher prices for goods affected by tariffs… Tariffs were a significant concern noted by manufacturers, as they were believed to raise costs of raw materials, thereby raising prices and lowering demand… Several retailers reported narrowing profit margins as cost of goods increased as a result of tariffs.’
• St. Louis: ‘Contacts expressed concern over the ongoing tariffs leveled at U.S. agricultural products. There are reports of storage shortages as soybeans that are normally exported to China are being stored in large quantities rather than exported.’
• Dallas: ‘Manufacturing sector slowed during the reporting period, and outlooks were less optimistic than they have been all year. Output growth softened notably in November, with the tariffs, labor constraints, and trade policy uncertainty cited as damping factors.’

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Disclaimer: The preceding was provided by Cumberland Advisors, Home Office: One Sarasota Tower, 2 N. Tamiami Trail, Suite 303, Sarasota, FL 34236; New Jersey Office: 614 Landis Ave, Vineland, NJ ...

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