Preliminary SORCE Insights: How Are Firms Managing Rising Costs

Introduction

The Cleveland Fed's latest edition of the Survey of Regional Conditions and Expectations (SORCE), administered during September 18-25, included a set of special questions alongside the standard question set that informs the SORCE indexes. These special questions focused on changes in Fourth District firms' nonlabor costs, selling prices, revenue, and wages and salaries.

Respondents said their firms' nonlabor costs had risen by an average of 6.8 percent over the past 12 months. Roughly two-thirds indicated that they had raised prices to offset some portion of these higher costs, and more than half noted adopting new technologies or increasing automation to reduce overall nonlabor operating expenses. Respondents reported that their firms' selling prices had risen by an average of 3.3 percent over the past 12 months, and they expected greater price growth in the 12 months ahead. Below is a summary of the top-line results from each of the special questions.¹

Respondents indicated that their firms' nonlabor costs had increased by an average of 6.8 percent over the past 12 months. On average, wages and salaries had risen by 4.8 percent, selling prices by 3.3 percent, and revenue by 2.9 percent over the same period. The averages for nonlabor costs and selling prices exclude financial services contacts.

In percentage terms, by how much has the following changed over the past 12 months?