The Federal Reserve Bank of Atlanta publishes a monthly report titled “Business Inflation Expectations” (BIE) that contains statistics from a survey of regional businesses’ views on various factors that impact profitability. These factors include unit costs, unit cost expectations, sales levels, profit margins, and other factors.
As described on the site:
Approximately 300 panelists receive the survey each month. Panelists represent businesses of various sizes headquartered within the Sixth District, which encompasses Alabama, Florida, Georgia, and sections of Louisiana, Mississippi, and Tennessee. Panelists range from executives of large corporations to owner-operators of small businesses. The industry composition of the panel roughly reflects the makeup of the national economy. Nevertheless, survey responses are weighted by industry shares of national gross domestic product.
An excerpt from the November 2014 BIE Survey (pdf) dated November 12, 2014 (involving 209 firms responding):
Respondents indicated that, on average, they expect unit costs to rise 2.0 percent over the next 12 months. Inflation uncertainty was unchanged at 2.4 percent. Firms also report that, compared to this time last year, their unit costs are up 1.9 percent. Respondents’ sales levels, compared to what they consider “normal” conditions, showed improvement; approximately 61 percent of respondents indicating current sales levels are at or above normal. Profit margins were virtually unchanged, with roughly 49 percent of respondents indicating their profit margins are at or above normal.
This month’s “quarterly question” concerned “Factors influencing price change.” As seen in the report:
About 71 percent of respondents, the largest percentage to date, expect labor costs to put moderate or strong upward pressure on their prices over the next 12 months. Respondents’ expectations regarding the influence of nonlabor costs on prices decreased from the last measure, which was taken in May; 62 percent of respondents indicating upward price pressure. Forty-two percent of respondents expect sales levels to put moderate or strong upward pressure on prices in the year ahead. The majority of firms expect productivity and margin adjustments to have little or no influence over prices in the next 12 months.
The detail highlights trends of five factors affecting prices, including Labor Costs, Non-Labor Costs, Productivity, Margin Adjustments, and Sales Levels.
Furthermore, the “special question” asked respondents about year-ahead compensation growth expectations.
The report also includes a variety of charts and tables depicting respondents’ answers.
StratX, LLC offers the above commentary for informational purposes only, and does not necessarily agree with all (or any) of the views expressed by these outside parties.
ProfitabilityIssues.com is published by StratX, LLC (stratxllc.com). StratX, LLC is a management consulting firm and strategic advisory that focuses on the analysis of current and future business conditions, and given these conditions, offers corporations and businesses advice, strategies, and actionable methods on how to optimally increase revenues and profitability.