Firms continue to implement technologies or strategies that economize on labor and other inputs. Respondents in all sectors characterize their results as strong. Permanent employment is said to be holding steady. Most retailers indicate that base wages are increasing at a 3 to 5 percent rate, although overall compensation is increasing faster because of performance-based incentives. However, contacts in faster-growing sectors are raising wages at a 5 to 10 percent pace in order to attract scarce labor.
Retailers continue to report little evidence of inflation except in the fast-growing tourist sector.
Contacts say that profit margins are increasing slightly as technological improvements yield cost efficiencies. Most contacts say that the economy is currently very strong and they are optimistic concerning sales growth prospects for the first half of 2000. However, looking toward the second half of the year, they expect to see a moderation in the rate of growth in consumer spending, reflecting the braking action of interest rate hikes and oil price increases. Most First District manufacturing contacts report that recent business is up relative to a year earlier, although typically the gains are modest. Makers of building equipment and furnishings report solid activity.