Business Unit Cost Trends And Concerns For 2017

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 December 2016 BIE Survey dated December 16, 2016 (involving 206 firms responding):

Respondents indicated that, on average, they expect unit costs to rise 2.1 percent over the next 12 months. Inflation uncertainty was virtually unchanged at 2.2 percent. Firms also report that, compared to this time last year, their unit costs are up 1.7 percent. Respondents’ sales levels, compared to what they consider normal conditions, improved to a diffusion index value of -11 compared to -15 in November. Profit margins were unchanged, with a diffusion index value of -20.

This month’s “quarterly question” concerned “Percent above/below normal sales levels.”

This month’s “special question” regarded “Biggest concerns for 2017.”  An excerpt:

Firms’ biggest concerns for the year ahead center on their cost structure (potential health care cost, input price, and wage increases), regulatory and compliance concerns, uncertainty regarding government policy, and their ability to attract and retain qualified labor. These concerns are similar to those expressed when firms were asked the same question about 2016.

The report also includes a variety of charts and tables depicting respondents’ answers.

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RevSD, 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.

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ProfitabilityIssues.com is published by RevSD, LLC.  RevSD, 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.