WASHINGTON — The Atlanta Federal Reserve Bank's monthly survey released Friday showed businesses in the Sixth district lowered their inflation estimates for the next 12 months, expecting unit costs to increase by 1.8%, compared with an estimate of 2.0% in the April survey.

Businesses' inflation uncertainty was increased slightly in June to 2.6% versus 2.5% in May, with firms reporting that their unit costs are up 1.7% from last year.

The survey noted "dramatic improvement" in sales levels from this time last year, with 56% saying that sales are "at or above normal" and 49% saying profit margins are also either "at or above normal." The 56% of respondents who said current sales levels are either normal or better than normal represents the largest percentage for that category since the series began.

Although respondents said unit sales levels are about 4.3% below normal it represents "a significant improvement from March."

The survey also said that "firms of all sizes experienced this narrowing of the unit sales gap, with midsize firms (100-499 employees) seeing the largest improvement at 1.5% below normal, compared to 6.8% below normal in March," and that small firms which have less than 100 employees are "still reporting a relatively large unit sales gap, were at 7.3% below normal versus 12.2% below normal in March."

Large firms also indicated an improvement in the unit sales gap with 2.2% saying it was below normal, compare to 3.3% saying the sales gap was below normal in March.

Answering a "special question" which had respondents assign likelihoods of price change scenarios over the next 12-months, "respondents' mean expectation (weighted by industry share of GDP) for the change in the average price of their products and/or services was 1.5%."

The survey was conducted June 10-14 with 190 firms responding.

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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