US businesses expect their unit costs to rise 2.3 percent over the next 12 months, down from 2.4 percent in September, according to the Federal Reserve Bank of Atlanta's Business Inflation Expectations (BIE) survey for October, released on Wednesday, October 21.

Source: Seeking Alpha / Atlanta Fed BIE

The reading continues a long retreat from the 3.8 percent peak reached in April 2022, but it remains above the 2.0 percent average recorded between January 2017 and December 2019, suggesting businesses still expect somewhat stronger cost pressures than before the pandemic. The Atlanta Fed said firms' year-over-year unit-cost growth remained constant at 2.6 percent, on average, and that sales levels and profit margins compared with normal times increased.

Source: Federal Reserve Bank of Atlanta — BIE survey

2.3%year-ahead cost expectation (Oct)
2.4%September reading
3.8%peak in April 2022
2.6%year-over-year unit-cost growth

Uncertainty about year-ahead unit costs has increased since reaching a low of 1.9 percent in February, the survey reporting noted. In October's special questions on employee turnover, most firms said turnover had been relatively stable over the past year, and the average business expects monthly turnover to decline by roughly two percentage points to 5.6 percent over the next 12 months.

Source: TradingView / GuruFocus summary of the Atlanta Fed BIE

The survey lands days before the Federal Open Market Committee meets on October 27–28. A Reuters poll of economists conducted October 16–20 found 94 of 100 expect the Fed to hold its rate at 3.75–4.00 percent at that meeting, while all 100 expect a hike in December — context that makes even a small cooling in business cost expectations worth watching for households, borrowers and truckers paying for fuel on credit.

Source: Reuters via Kitco News