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Business Activity Growth Slows While Labor Cost Inflation Hits Record High: Chicago Fed

A new report from the Chicago Federal Reserve on business conditions in the central bank’s seventh district paints a picture of slowing growth and historically high price pressures, with labor cost inflation at a record high. The Chicago Fed Survey of Business Conditions, released on Sept. 13, shows that the headline business activity index fell to a reading of -2 in August from +14 in July, suggesting August growth fell below trend. At the same time, labor costs rose to a series high of +42 in August, up two points from July and the highest reading in the eight-year history of the series. Nonlabor cost pressures—led by materials, shipping, and energy—held steady over the month at +23, a level not seen since mid-2018. The report is based on a survey of over 800 business contacts in the Seventh Federal Reserve District and provides input into the Fed’s recently released so-called “Beige …

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