KANSAS CITY, Mo. – Services activity in the 10th District of the Federal Reserve Bank rose further from a month ago and expectations for future activity expanded modestly.
“Regional services activity grew in March,” said Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City. “Increasing input prices continued to negatively impact firms, but district contacts also reported an uptick in sales and employment levels from last month.”
The Kansas City Fed’s monthly Survey of Tenth District Services provides information about several indicators of activity including sales, revenue, employment and capital spending, while identifying changes in prices of input materials and selling prices.
Survey participants represent a variety of industries, including retail and wholesale trade, automobile dealers, transportation, information, high-tech and professional services, real estate, education, restaurants, health services, tourism and other services firms.
Contacts were asked special questions about materials price increases and the impact of the vaccination rollout on business conditions.
Approximately 18% of the firms contacted said they can fully pass price increases through to customers and 32% of firms could pass through a majority of price increases. Another 30% of firms reported an ability to pass through only a minority of price increases to the customer, and 20% percent indicated they were unable to pass through price increases at all.
Regarding the pandemic, 34% of firms said the current pace of vaccinations and trajectory of the pandemic had not changed their business plans. On the other hand, more than 26% of businesses reported an increased demand for their products or service as a result of the drop of COVID-19 cases and rise in vaccinations, and 24% of firms said that this trajectory has allowed them to relax COVID cautionary measures in the workplace.
A little over one-fifth of the firms contacted reported an increase in business travel. Additionally, 15% of contacts brought employees back to the office or workplace, and another 15% indicated they are considering bringing employees back to the office sooner than expected due to the drop in COVID-19 cases and vaccination progress.
The Federal Reserve Bank of Kansas City serves the Tenth Federal Reserve District, which encompasses the western third of Missouri; all of Kansas, Colorado, Nebraska, Oklahoma and Wyoming; and the northern half of New Mexico.
As part of the nation’s central bank, the Federal Reserve Bank of Kansas City participates in setting national monetary policy, supervising and regulating numerous commercial banks and bank holding companies, and providing financial services to depository institutions.