Business Inflation Expectations Rise as Hiring Plans Hold Up — Evening Brief – 09.23.26

Businesses expect their costs to rise faster over the coming year, but most still anticipate stable or growing employment, according to the Federal Reserve Bank of Atlanta’s September Business Inflation Expectations survey.

Firms projected a 2.4% increase in their own unit costs over the next 12 months, up from 2.2% in August. The latest reading remains below the survey’s April 2022 peak of 3.8%, but above its 2% average from 2017 through 2019. Expected unit-cost growth over the longer term, five to 10 years ahead, held at 2.8% from June.

In questions about staffing, roughly half of respondents said they expected to increase employment over the next 12 months. Only 10% anticipated cutting staff. Construction, real estate, mining and utilities, and corporate services had the highest shares of firms expecting employment growth. Smaller firms were less confident: About one-third expected to add workers.

Respondents reported average wage growth of about 3.5% over the preceding year, which the Atlanta Fed said was just below headline inflation as measured by the personal consumption expenditures price index. They expected wages at their firms to rise about 3.8% to 4% over the coming year.

The survey also found that reported year-over-year unit-cost growth increased to 2.6%, while assessments of sales and profit margins relative to normal weakened.