WASHINGTON — The Atlanta Federal Reserve Bank's monthly survey released Wednesday shows businesses in the Sixth district left their inflation outlook for the next 12 months essentially unchanged, with their expectations appearing to remain well-anchored.

Respondents to the survey projected unit costs to increase by 1.9%, the same rate expected in the October and September surveys.

The survey also noted that while there was only a slight change — or no change — in sales levels and profit margins compared to last month.

The Atlanta Fed survey said businesses' inflation uncertainty was steady in November, coming in at 2.3% after 2.4% in October. Firms reported that unit costs had risen by 1.6% compared to October last year.

The survey was conducted November 4-8 with 207 firms responding to questions about their business conditions, inflation outlook, and potential pricing pressures.

In last month's survey, respondents had noted that sales levels declined in October, with 46% of respondents saying current sales levels were at or above normal. Profit margins also declined, respondent said, with 41% of respondents indicating that profit margins are at or above normal.

In November, "sales levels were relatively unchanged," the Atlanta Fed said, with 44% of respondents now saying their current sales levels are at or above normal. Profit margins also were unchanged, it continued, with 41% again indicating their profit margins are at or above normal.

In a quarterly question on the factors influencing changes in prices, the Atlanta Fed survey said 65% of respondents expect labor costs to put "moderate or strong upward pressure on their prices over the next 12 months, a relatively large share of responses that has trended slightly upward."

On the other hand, it said respondents' expectations regarding the upward influence of non-labor costs on prices over the next 12 months have lessened, to 66%, and are now roughly equal to expectations for the upward influence of labor costs.

The survey said 39% of respondents expect sales levels to put moderate or strong upward pressure on prices in the year ahead, "a measure that has increased since May."

The Atlanta Fed also includes a special question in its survey every quarter. This time around it was used to "was used to assess the full range over which panel members anticipate their sales levels could increase or decrease over the next 12 months."

Respondents were asked "to indicate whether they felt that their firm's performance was a leading, lagging, or coincident indicator of overall economic recession or expansion."

The Atlanta Fed said that to elicit this range while also testing methods for asking such a question, two versions of the same question were randomly assigned. Version 1 asked businesses to provide their best, middle, and worst case unit sales change percentages under specified probability assumptions. Version 2 asked them to assign probabilities to a wide set of possible unit sales change outcomes.

"The results of these questions produced a similar mean year-ahead unit sales level growth expectation, 5.3% for the best/middle/worst version and 5.6% for the alternative version," the Atlanta Fed said.

Market News International is a real-time global news service for fixed-income and foreign exchange market professionals. See www.marketnews.com.

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