Staffing levels, the price of raw materials and continued COVID-19 safety precautions will undercut businesses’ ability to meet increased demand when the economy rebounds, according to two surveys released on Friday.
The Federal Reserve Bank of New York found 37% of retailers and service firms in the metropolitan area saying their "major constraint" to future growth is not having enough employees to fulfill additional orders when the recession ends.
This concern reflects the loss of 1.1 million jobs in the metro area between February and the same time last year, according to the most recent data from the federal Bureau of Labor Statistics.
Other top constraints to the growth of service firms are residual coronavirus precautions, identified by 32% of those polled, and rising employee salaries, 21%.
In a separate survey, half of manufacturers across the state said their biggest hurdle to capitalizing on the economic recovery is raw materials — where to get a sufficient supply and the rising price of them.
Staffing levels is the next challenge, identified by 38% of factories. There were 27,400 fewer factory jobs in the state last month compared with March 2020, according to the state Department of Labor.
The New York Fed surveyed about 125 manufacturers and about 200 service firms in April 2-9, with Long Islanders participating in both polls.
The businesses were asked about changes in employee compensation over the past year.
"Among service firms, the average change was a rise of 1.6% for existing workers and 2.4% for new hires," the bank said. "Among manufacturers, the averages were considerably higher: increases of 4% and 5.2%, respectively.
Bank economists Jason Bram and Richard Deitz said metro-area service firms turned optimistic this month about the economy for the first time since the virus struck a year ago. They have lagged manufacturers for months.
"The survey’s headline business activity index surged 35 points to 30.2," the first such rise since February 2020, the economists said. "Employment levels moved higher for the first time in over a year."
The business activity index gauges sales while the employment index gauges hiring.
"Looking ahead, service firms expressed widespread optimism that conditions would improve, with the future employment index reaching a record high," the economists said.
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