The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
November 2012 For immediate release: November 21, 2012 Contact: Jean Tate, 404-498-8035 or jean.tate@atl.frb.org The inflation expectations of businesses in the Southeast for the coming year rose to 2.1 percent in November, up from 1.8 percent in October, according to the Federal Reserve Bank of Atlanta’s most recent business inflation expectations (BIE) survey. The survey was conducted November 12–16 with 198 firms responding to questions about their business conditions, inflation outlook, and potential pricing pressures. The results are summarized below. EXPECTED CHANGE IN UNIT COSTS Respondents indicated that, on average, they expect unit costs to rise 2.1 percent over the next 12 months. This number is up from 1.8 percent in October, reflecting the largest month-over-month increase since the series began in October 2011. That is roughly in line with the recent year-ahead inflation forecasts of private economists. Inflation uncertainty increased by 0.1 percentage point to 2.6 percent in November. Firms also reported that, compared to this time from 1.8% in October last year, their unit costs were up 1.7 percent. 2.1% FACTORS INFLUENCING PRICE CHANGES Both sales levels and margins held steady this month after some deterioration in October. Projecting ahead, firms continue to anticipate little or moderate upward pressure coming from input costs over the next 12 months. However, their expectations for price increases resulting from labor costs over the next year rose in November, with the average likelihood of moderate to strong upward pressure in labor costs rising from 58 percent to 62 percent. In comparison to their assessment in October, firms indicated that sales levels are now more likely to put downward pressure on prices over the next 12 months. SPECIAL QUESTION The November special question sought to measure firms’ year-ahead sales expectation and their uncertainty with regard to this expectation. On average, respondents projected sales levels to rise 1.2 percent over the next 12 months. Firms’ sales forecast uncertainty was 2.8 percent (measured by the average respondent’s variance). When examining the data by sector, expectations varied widely, with manufacturers indicating the highest average year-ahead sales level expectation (1.8 percent). 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* September 12% 38% 35% 15% 1% -23 October 15% 45% 27% 12% 1% -30 November 17% 42% 29% 11% 2% -30 How do your current PROFIT MARGINS compare with “normal” times? Much less Somewhat less About normal Somewhat greater Much greater Diffusion Index* September 13% 41% 34% 11% 1% -28 October 19% 42% 31% 8% 1% -35 November 15% 45% 34% 6% 1% -33 Looking back, how do your UNIT COSTS compare with this time last year? Down (<-1%) About unchanged (-1% to 1%) Up somewhat (1.1% to 3%) Up moderately (3.1% to 5%) Up a lot (>5%) Average September 10% 29% 50% 10% 2% 1.3% October 8% 29% 53% 7% 4% 1.4% November 7% 23% 56% 11% 4% 1.7% Projecting ahead over the next 12 months, how do you think the following five common influences will affect the prices of your products and/or services? Strong downward influence Moderate downward influence Little/no influence Moderate upward influence Strong upward influence Diffusion Index† September 0% 2% 42% 50% 6% 29 October 0% 2% 39% 56% 2% 29 November 0% 2% 36% 53% 9% 34 September 0% 2% 24% 60% 14% 43 October 1% 1% 23% 61% 14% 43 November 0% 2% 22% 63% 13% 43 September 1% 18% 65% 15% 1% -1 October 0% 16% 67% 15% 1% 0 November 0% 17% 64% 17% 1% 1 Labor Costs Non-Labor Costs Productivity Margin Adjustments September 2% 13% 57% 28% 0% 6 October 1% 16% 56% 26% 1% 5 November 2% 13% 54% 28% 3% 9 September 1% 21% 43% 34% 2% 8 October 2% 17% 46% 32% 3% 8 November 3% 24% 45% 24% 3% 1 Sales Levels 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%) Average Median Mode Variance September 8% 29% 40% 16% 7% 1.7% 1.7% 1.6% 2.6% October 6% 29% 40% 16% 8% 1.8% 1.8% 1.7% 2.5% November 6% 23% 41% 20% 10% 2.1% 2.0% 1.9% 2.6% Special Question: Projecting ahead, to the best of your ability, please assign a percent likelihood to the following changes to SALES LEVELS over the next 12 months. Sales levels up very significantly (>5%) Mean Median Mode Variance 12% 6% 1.1% 1.1% 1.3% 2.7% 9% 4% 0.5% 0.4% 0.1% 2.8% 27% 14% 3% 1.0% 1.0% 1.0% 2.5% Sales levels down (<-1%) Sales levels about unchanged (-1% to 1%) Construction and Real Estate (34) 17% 35% 29% Finance and Insurance (20) 24% 42% 23% General Services (15) 11% 45% Sales levels Sales levels up up somewhat significantly (3.1% to 5%) (1.1% to 3%) Manufacturing (34) 16% 24% 26% 18% 15% 1.8% 1.8% 2.2% 2.9% Retail & Wholesale Trade (42) 18% 25% 30% 18% 10% 1.5% 1.5% 1.4% 3.2% Other (52) 12% 32% 33% 15% 8% 1.5% 1.5% 1.3% 2.7% All Respondents (197) 16% 32% 29% 15% 8% 1.2% 1.2% 1.1% 2.8% 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. †The diffusion index is calculated such that each response of strong downward influence is assigned a value of –100, moderate downward influence is assigned a value of –50, little/no influence 0, moderate upward influence 50, and strong upward influence 100. Therefore, a positive index value indicates that overall prices are being influenced upwards, on average, and a negative index value indicates that prices are being influenced downwards, on average.