Worker shortage and inflation continue to impact Knoxville economy
By Kailyn Lamb, Marketing Content Writer and Editor, PYA
The May “Economic Conditions Outlook” (ECO), financed by First Horizon Bank, continues to show supply chain issues and rising costs impacting the local businesses surveyed by the Knoxville Chamber for the report.
Companies in the manufacturing sector said general business activity had “worsened.” The respondents’ outlooks, on the other hand, were split between “improved” and “worsened,” a slight change from last month when responses were split between “improved” and “the same.” Comments from manufacturing businesses showed that supply chain issues are worsening for materials such as paper products, silicone, and plastics.
In the retail sector, businesses said general activity and company outlooks are mostly “the same” from last month. Businesses in the sector commented on rising costs for products and freight. Finally, in the service sector, businesses also reported that general activity and company outlooks are “the same.” Service businesses reported inflation has impacted their bottom line. Supply chain issues are causing delays, and hiring quality employees has been a challenge. The housing supply is also impacting the worker shortage.
This month, the “ECO” also surveyed businesses on their use of automated equipment such as robots. Nearly 80 percent of the surveyed businesses said they had not automated any business operations. Of those, 53 percent said it was due to the nature of their business and regulatory restrictions. Others reported it was due to a lack of time, technological capabilities, or irrelevance of robotics to some operations. The small portion of businesses that had added automated operations said no jobs were eliminated as a result. Those businesses also reported increased productivity and cost cuts. The “ECO” also included information on several reports stating that automation and robotics are on the rise in many sectors. (See pages 5-6 on the full report for links and more information.)
The April unemployment rate in the Knoxville Metropolitan Statistical Area (MSA) was unchanged from March and remained at 2.6 percent. In Knox County, the April unemployment rate was 2.5 percent compared to 2.4 percent in March. In April there were 11,103 unique active job postings in the Knoxville MSA. In Knox County, there were 7,327 job postings. Both were up nearly 2 percent compared to March.
In this month’s worker shortage update, the “ECO” noted that increased travel will put more pressure on summer jobs. Read more on that here. The report also noted that a proven strategy for employers is an internship program. The Chamber developed a toolkit to help small and mid-size businesses create an internship program, which can be found here.
Other important trends identified were:
- The national inflation rate for April 2021 to April 2022 is 8.3 percent, down slightly compared to March. However, it is still nearly double last year’s inflation rate, which was 4.2 percent. In the Knoxville region, general inflation is also down from April to March. The April 2021 to April 2022 inflation rate is 8.7 percent.
- Home sales in the City of Knoxville saw a slight increase of 1.2 percent in April. Knox County sales increased by 7.7 percent. However, in both areas, sales are down 2.4 and 11.1 percent respectively from last year.
- In Knoxville, the median home sale price was $325,000 in April, an increase of 25 percent compared to last year. Similarly, the median home sale price in Knox County was $340,000, up 26.2 percent from last year. The number of homes that sold above asking price increased compared to last month. In April 53 percent of homes sold for more than the asking price, compared to 43 percent in March.
- In some good news, total housing inventory in the Knoxville area was up for the first time in 12 months. In Knox County, however, inventory was down 7.9 percent year-over-year.
- The Knoxville MSA collected $122.4 million in state sales tax in April, an increase of 20 percent from March. In Knox County, $80 million in state sales tax was collected, an increase of 17.2 percent from March.
- The number of new business licenses issued in April in Knox County was down 12.5 percent compared to last year. A total of 237 licenses were issued.
- Travel numbers are also on the rise. The Metropolitan Knoxville Airport Authority recorded more than 202,000 passengers in April, a 0.3 percent increase compared to March. The estimate is up 6.8 percent compared to pre-COVID numbers in April 2019. National flight passenger numbers are still down 9.5 percent compared to April 2019.
You can read the full report here.
