Contacts that are increasing employment are staffing expanded operations. Most contacts report difficulty attracting help and a corresponding decline in available labor quality. Labor market tightness, however, is not translating into higher wages. Wages are said to be increasing at a 3 to 5 percent annual pace. Contacts say that they are not offering wage premiums to attract labor, with the exception of computer systems professionals.
Respondents report that competitive pressures continue to constrain their ability to raise prices.
Materials costs are holding steady. Most contacts say that profit margins are unchanged or increasing slightly. Increases in profit margins are attributed to efficiency improvements such as better inventory control, automation, and purchasing efficiencies. All respondents say that capital expansions are currently under way and will continue for many months. Looking forward, retailers expect steady, sustainable growth with low inflation through the first quarter of 1998.