The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
BIE September 2014 Atlanta Fed Survey of Business Inflation Expectations For immediate release: September 19, 2014 Contact: Jean Tate, 404-498-8035 or jean.tate@atl.frb.org The year-ahead inflation expectations of businesses were 2.1 percent in September, according to the Federal Reserve Bank of Atlanta’s most recent business inflation expectations (BIE) survey. The survey was conducted September 8–12 with 190 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 2.1 percent over the next 12 months. Inflation uncertainty was up slightly at 2.5 percent. Firms also report that, compared to this time last year, their unit costs are up 1.8 percent. Respondents’ sales levels compared to what they consider “normal” conditions were virtually unchanged, with approximately 59 percent of respondents indicating current sales levels are at or above normal. Profit margins showed no improvement, with roughly 48 percent of respondents indicating their profit margins are at or above normal, compared to 47 percent in August. Quarterly question: Percent above/below normal sales levels* On average (weighed by industry share of GDP), respondents indicated their unit sales gap (percentage below normal unit sales) was approximately 3.6 percent below normal compared to 3.4 percent below normal in August. On average, both large firms (500 or more employees) and small firms (fewer than 100 employees) indicated growth in their unit sales gaps, from 1.2 to 2.2 percent below normal and 6.1 to 7.6 percent below normal, respectively. Midsize firms’ (100-499 employees) reported about “normal” conditions (a unit sales gap of -0.1 percent), on average. Special question: Year-ahead expected change in “prices…overall in the economy” This question assessed firms’ expectations regarding potential changes in “prices…overall in the economy.” Firms’ median year-ahead price change expectation was 3.0 percent. Please see page 3 for a breakdown of the results. *Note: Due to a programming error, the unit sales gap quarterly question was asked out of turn in August. It was asked again this month. 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) 3.0 2.5 2.5 2.0 2.1 1.5 1.0 Uncertainty Year-ahead inflation expectations 0.5 0.0 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Source: Atlanta Fed Business Inflation Expectations (BIE) Survey Sales Levels and Profit Margins Compared to Normal Times Year-over-Year Unit Cost Change (percent) (diffusion index, 0+ = greater than normal times) 10 5 0 -5 -10 -15 -20 -25 -30 -35 -40 3.0 2.5 above normal below normal Sales levels -14 Profit margins 1.5 -24 1.0 0.5 0.0 -2.5 (38) Source: Atlanta Fed Business Inflation Expectations (BIE) Survey Quarterly Question 4 2 0 1.8 2.0 -3.4 (208) ######## ######## ######## Source: Atlanta Fed Business Inflation Expectations (BIE) Survey Mean Percent Above/Below Normal Sales Levels Large firms (500+ employees) Midsize firms (100–500 employees) Small firms (1–99 employees) -2 All firms (weigthed by sector GDP contribution) -0.1 -2.2 -3.6 -4 -6 -7.6 -8 -10 -12 -14 Source: Atlanta Fed Business Inflation Expectations (BIE) Survey 2 Special Question Expectations for Year-Ahead Change in "Prices...Overall in the Economy" percent, distribution of responses 35 Percentage of responses 30 25 20 15 10 5 0 0 1 2 3 4 5 6 7 Source: Atlanta Fed Business Inflation Expectations (BIE) Survey 3 8 9 10 11 12 13 14 15 How do your SALES LEVELS compare with sales levels during what you consider to be “normal” times? Much less Somewhat less Somewhat greater About normal Much greater Diffusion index* July 13% 33% 38% 16% 0% -21 August 10% 33% 34% 21% 3% -13 September 9% 32% 38% 18% 3% -14 How do your current PROFIT MARGINS compare with “normal” times? July Much less Somewhat less About normal Somewhat greater Much greater Diffusion index* 11% 41% 36% 12% 1% -25 August 12% 42% 34% 12% 1% -26 September 11% 41% 34% 13% 1% -24 Up moderately (3.1% to 5%) 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%) Up somewhat (1.1% to 3%) July 3% 20% 61% 12% 3% 1.8% August 4% 22% 58% 11% 5% 1.8% September 2% 23% 61% 9% 4% 1.8% 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. July 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) 5% 26% 44% 17% 8% 1.9% (2.3%) August 6% 23% 45% 19% 8% 2.0% (2.3%) September 5% 24% 43% 19% 9% 2.1% (2.5%) Quarterly Question: By roughly what percent are your firm's sales levels above/below “normal,” if at all? Average percent above/below normal (number of responses) Firm size Sep-13 Dec-13 Mar-14 Jun-14 Aug-14 Sep-14 Small (1–99 employees) -7.4 (92) -8.6 (85) -9.1 (83) -7.8 (131) -6.1 (117) -7.6 (89) Midsize (100–499 employees) -6.6 (48) -2.2 (49) -5.6 (46) -2.5 (44) -2.5 (38) -0.1 (39) Large (500+ employees) -2.5 (66) -3.8 (69) -3.0 (67) -1.7 (61) -1.2 (53) -2.2 (57) All -5.6 (206) -4.8 (203) -5.7 (196) -3.7 (236) -3.4 (208) -3.6 (185) 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