U.S. businesses have scaled back or postponed investments in several parts of the country due to concerns about international trade tensions, the Federal Reserve said on Wednesday.
The U.S. central bank also said in its Beige Book report that the effects of tariffs appeared to be modest, though they were boosting input prices, particularly among manufacturers.
The report, a snapshot of the economy gleaned from discussions with business contacts in the Fed’s 12 districts, detailed business worries about the Trump administration’s trade war with China and simmering tensions with other major trading partners.
“Most districts noted concern and uncertainty about trade tensions - particularly though not only among manufacturers,” according to the report.
In several districts, the Fed said, businesses reported scaling back or postponing investments due to worries about the trade outlook. The Fed did not give specific examples of postponed or scaled back investment.
However, it said: “One utility firm noted that tariffs on some construction materials may force them to scale back capital investment a bit.”
President Donald Trump has slapped tariffs on imports from a range of trading partners, including China the European Union, Canada and Mexico, prompting retaliation against U.S. exports.
Despite the trade tensions, the Fed said the economy was expanding at a moderate pace and a tight job market has led to labor shortages across the country and in many occupations. Companies for several years have reported shortages of construction workers, truck drivers and engineers.
But more recently, “a number of districts also noted shortages of lower-skill workers at restaurants, retailers, and other types of firms,” the Fed said.
The Fed has raised interest rates twice this year and is widely expected to lift them again at its Sept. 25-26 monetary policy meeting.