Wage growth for most workers has picked up a notch, to a 4 to 6 percent pace. Wages for computer-related occupations are said to be increasing at an 8 to 10 percent rate. Most respondents report that both sales prices and gross margins are holding steady. However, the cost of some merchandise has declined as a result of import price reductions. Other non-labor costs are stable.
Retailers report that capital spending increases are primarily technology-related.
In contrast with 1997, they are not planning major store expansions, except in the very fast-growing office supply sector. Of the remainder, about the same number report faster growth as report declines. Contacts indicate brisk activity and some capacity constraints for telecommunications equipment, automotive and aircraft components, furniture and home appliances, cable, and packaging. Demand by small businesses for office equipment and supplies is said to be growing strongly. Manufacturers in these various product lines remain upbeat about future trends.