There are scant signs of inflation and wages for American workers remain stubbornly low despite "widespread" labor shortages, according to a US Federal Reserve survey published Wednesday.
Growth in the world's largest economy also continued nationwide between September and early October at a pace "split between modest and moderate" while temporary disruptions from Hurricanes Harvey and Irma persisted, according to the periodic Fed survey known as the Beige Book.
The Fed survey, which summarized anecdotal reports from business contacts on economic conditions across all 12 Federal Reserve districts, portrayed a continuing conundrum for central bankers.
Steadfast economic growth and job creation are failing to stir pay raises and inflation -- circumstances which cast doubt on the pace of the central bank's interest rate tightening.
"Many districts noted that employers were having difficulty finding qualified workers," the report said. "Despite widespread labor tightness, the majority of districts noted only modest to moderate wage pressures."
Fed members are sharply divided over the dangers of inflation and a vocal minority argue the central bank should hold off raising interest rates and allow job creation to continue until signs of inflation occur.
The Fed's preferred inflation measure, the Personal Consumption Expenditures price index, fell to 1.3 percent in August, when volatile food and fuel prices are excluded, and has remained below the Fed's two percent target for more than five years.
Other advanced economies report similar conditions, with Japanese and European central bank chiefs also describing more-or-less inflation-free growth in recent years.
Still, US policymakers as a group have said they expect price pressures to kick in soon and have forecast a final hike in 2013 and three more in 2018.
Those favoring rate hikes worry that raising rates too slowly could force the Fed to jack them up suddenly in the future, harming the economy -- or that too much cheap money could favor excessive risk-taking on financial markets, with Wall Street already at dizzying heights.
- Bonuses, over-time but no raises -
Acute labor shortages have cropped up in construction, which holds down home building, in transportation and in skilled manufacturing as well as health care and services industries, according to the report.
"These shortages were also restraining business growth," the survey said. "Firms in several districts reported that scarcity of labor, particularly related to construction, would be exacerbated by hurricane recovery efforts."
Despite employer demand in the Minneapolis region, according to the report, "job growth suffered from a lack of available workers."
A local reserve bank contact at a staffing agency said hiring was "robust."
"If I had 100 people, I could put them all to work," the contact said, according to the report.
While pay checks grew in some sectors, such as transportation and construction, employers were resorting to other means of attracting scarce workers.
"Growing use of sign-on bonuses, over-time and other non-wage efforts to attract and retain workers were also reported."
Elsewhere, there were some spotty signs of inflation. The New York Fed reported a contact had told the bank tickets for Broadway shows were now about 12 percent more expensive than in 2016.
In the Richmond Fed area, a food manufacturer worried about future prices for plastic wrap. And business contacts said jobs markets "strengthened and wage pressures broadened," while prices "rose moderately " -- in part due to the supply chain disruptions from the hurricanes.
In light of hawkish commentary from central bankers, market watchers continue to expect the Fed will stick to a planned course of interest rate hikes this year.
Following the release the October Beige Book, futures markets showed a slight rise on the probability of a rate hike at the Fed's December meeting, with the chances moving from 99.8 percent up to 91.7 percent.