The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
BIE January 2014 Atlanta Fed Survey of Business Inflation Expectations For immediate release: January 15, 2014 Contact: Jean Tate, 404-498-8035 or jean.tate@atl.frb.org The year-ahead inflation expectations of businesses were 1.9 percent in January, according to the Federal Reserve Bank of Atlanta’s most recent business inflation expectations (BIE) survey. The survey was conducted January 6–10 with 208 firms responding to questions about their business conditions, inflation outlook, and potential pricing pressures. The results are summarized below. Year-ahead inflation expectations and current conditions Respondents indicated that, on average, they expect unit costs to rise 1.9 percent over the next 12 months. Inflation uncertainty was unchanged at 2.3 percent in January. Firms also report that, compared to this time last year, their unit costs are up 1.7 percent. Respondents reported a slight decline in sales levels in January, with approximately 49 percent indicating their current sales levels are at or above normal compared to 54 percent in December. Profit margins also declined somewhat, with roughly 45 percent of respondents indicating their profit margins are at or above normal, compared to 50 percent in December. Quarterly question: Long-term inflation expectations Over the long term, that is, per year over the next five to 10 years, respondents expect unit costs to increase 2.8 percent, on average, virtually unchanged from the October reading of 2.7 percent. Respondents’ uncertainty (variance) regarding this expectation was unchanged at 2.3 percent. Special question: Year-ahead unit sales level change expectations The question assessed the full range over which panel members anticipate their unit sales levels could change over the next 12 months. To elicit this range, respondents were asked to provide the high case, medium case, and low case percentage unit sales level change their firm could experience over the next 12 months. Respondents were then asked to assign likelihoods to each of these scenarios. The average respondent’s year-ahead unit sales growth expectation was 4.3 percent. Please see page 3 for a breakdown of the results. For more information and interactive charts, visit the BIE survey site at www.frbatlanta.org/research/inflationproject/bie/. 1 Monthly Questions Year-Ahead Inflation Expectations and Uncertainty (percent) 3.5 3.0 2.3 2.5 2.0 1.9 1.5 Uncertainty 1.0 Year-ahead unit cost expectations 0.5 0.0 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Source: Atlanta Fed Business Inflation Expectations (BIE) Survey Sales Levels and Profit Margins Compared to Normal Times Year-over-Year Unit Costs (percent) (diffusion index, 0+ = greater than normal times) 5 0 -5 -10 -15 -20 -25 -30 -35 -40 -45 3.5 3.0 Sales levels Profit margins 2.5 1.7 2.0 -24 1.5 1.0 -29 0.5 Jan-13 Apr-13 Jul-13 Oct-13 0.0 Jan-14 Jan-13 Source: Atlanta Fed Business Inflation Expectations (BIE) Survey Apr-13 Jul-13 Oct-13 Jan-14 Source: Atlanta Fed Business Inflation Expectations (BIE) Survey Quarterly Question Long-Term Inflation Expectations and Uncertainty (percent, per year over the next five to 10 years) 3.5 2.8 3.0 2.5 2.3 2.0 1.5 Long-term Unit Cost Expectations 1.0 Uncertainty 0.5 0.0 Jan-13 Apr-13 Jul-13 Source: Atlanta Fed Business Inflation Expectations (BIE) Survey 2 Oct-13 Jan-14 Special Question Projecting ahead, over the next 12 months, please provide the approximate low case, medium case, and high case percentage change in your firm's unit sales levels. mean change 12 10 8 10.5 probability weighted mean: 4.3 percent* mean: 4.3 percent* 6 4.1 4 2 0 -2 -4 -3.4 -6 low case medium case high case *This represents the mean of all respondents' individual probability weighted means. Source: Atlanta Fed Business Inflation Expectations (BIE) Survey Please assign a percentage likelihood to the low case, medium case, and high case percentage unit sales level changes selected above. mean likelihood 60 55 50 45 40 35 30 25 20 15 10 5 0 55.0 23.8 low case 21.4 medium case Source: Atlanta Fed Business Inflation Expectations (BIE) Survey 3 high case How do your SALES LEVELS compare with sales levels during what you consider to be “normal” times? Much less Somewhat less About normal Somewhat greater Much greater Diffusion index* November 13% 43% 29% 15% 0% -26 December 12% 35% 33% 19% 2% -18 January 13% 39% 34% 14% 1% -24 How do your current PROFIT MARGINS compare with “normal” times? Much less Somewhat less About normal Somewhat greater Much greater Diffusion index* November 12% 46% 32% 9% 0% -30 December 15% 35% 37% 12% 1% -26 January 16% 39% 34% 10% 1% -29 Up a lot (>5%) Mean Looking back, how do your UNIT COSTS compare with this time last year? Down (<-1%) About unchanged (-1% to 1%) November 4% 28% 53% 12% 3% 1.6% December 4% 25% 53% 15% 3% 1.8% January 6% 24% 54% 13% 4% 1.7% Up somewhat Up moderately (1.1% to 3%) (3.1% to 5%) Projecting ahead, to the best of your ability, please assign a percent likelihood to the following changes to unit costs over the next 12 months. Down (<-1%) About unchanged (-1% to 1%) Up somewhat (1.1% to 3%) Up moderately (3.1% to 5%) Up a lot (>5%) Mean (Variance) November 5% 27% 42% 18% 7% 1.9% (2.3%) December 6% 26% 44% 17% 7% 1.9% (2.3%) January 6% 26% 43% 16% 8% 1.9% (2.3%) Quarterly Question: Projecting ahead, to the best of your ability, please assign a percent likelihood to the following changes to unit costs per year over the next FIVE TO 10 years. Unit costs down (<-1%) Unit costs about unchanged (-1% to 1%) Unit costs up somewhat (1.1% to 3%) Unit costs up significantly (3.1% to 5%) Unit costs up very significantly (>5%) Mean February (89) 4% 11% 38% 29% 17% 2.9% (2.8%) April (152) 4% 12% 36% 30% 18% 3.0% (2.6%) Month (number of responses) July (153) 4% 15% 36% 26% 19% 2.8% (2.9%) October (196) 4% 13% 36% 30% 17% 2.9% (2.7%) January (196) 3% 12% 32% 28% 23% 3.0% (2.5%) April (189) 4% 12% 38% 26% 20% 2.9% (2.2%) July (209) 4% 14% 37% 28% 15% 2.8% (2.4%) October (216) 4% 15% 45% 26% 11% 2.7% (2.4%) January (208) 4% 20% 43% 21% 11% 2.8% (2.3%) Note: Percentages may not sum to 100 due to rounding. *The diffusion index is calculated as an average response such that each response of much less is assigned a value of –100; somewhat less is assigned a value of –50; about normal, 0; somewhat greater, 50; and much greater, 100. Therefore, a positive index value implies that the indicator is greater, on average, and a negative index value implies that the indicator is lower, on average. 4