The Atlanta Federal Reserve 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 January 2014 BIE Survey (pdf) dated January 15, 2014 (involving 208 firms responding) :
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.
This month’s “quarterly question” concerned annual inflation expectations over the next five to ten years. As seen in the report:
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.
Furthermore, the “special question” asked respondents about their expectations for year-ahead unit sales growth. The respondents’ average year-ahead unit sales growth expectation was 4.3%.
The report also includes a variety of charts 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.