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Business sectors see improvements as gas prices continue to have impact

By Kailyn Lamb, Marketing Content Writer and Editor, PYA

In the April edition of the “Economic Conditions Outlook” (ECO) report, financed by First Horizon Bank, the Knoxville Chamber offered its usual survey of businesses in the manufacturing, retail, and service sectors, and added an additional survey on gas prices.

Nearly 80 percent of businesses responded that the increasing prices have negatively impacted their operations. Businesses with large fleets of vehicles, such as trucking firms, construction companies, repair contractors, landscapers, and more, have been hit especially hard, the “ECO” report noted. Businesses also reported that increased shipping and freight costs are cutting into net profits. Because of “set price” contracts, some businesses are unable to pass increased shipping costs onto customers. Others reported they feared losing customers if they increased prices to offset increased costs. Businesses in the manufacturing sector also reported increased costs of raw materials that are linked to oil, such as rubber and plastic. The Chamber included a report from AAA that said crude prices are likely to continue fluctuating, which means prices are likely to keep increasing. Read more here.

Some businesses surveyed by the Chamber for this month’s “ECO” report are seeing improvements. In the manufacturing sector, general business activity and company outlooks were split between “improved” and “the same.” In retail, businesses reported that general activity and company outlooks were “improved,” although supply chain issues continue to impact inventory. In the service sector, businesses reported general activity and company outlooks were “the same.” Businesses in that sector also reported that low housing inventory and the slow development of new housing continue to be a problem.

In the Knoxville Metropolitan Statistical Area (MSA), the March unemployment rate was 2.6 percent, a slight decrease from the February rate. Knox County saw a similar decrease from February to March, with the latter’s unemployment rate hitting 2.4 percent. In March, there were 10,923 unique active job postings in the Knoxville MSA, a slight decrease from February. In Knox County, there were 7,469 unique active job postings.

The “ECO” report highlighted a new trend termed “New Collar” work. Former blue-collar workers have left their hourly jobs in warehousing, manufacturing, and hospitality, and are moving into tech jobs, according to research from The Oliver Wyman Forum. With the increase in tech jobs and the current tight labor market, many companies are waiving pre-qualifications and instead are providing options for on-the-job training. This has opened up many opportunities for “New Collars.” Read more here.

Other important trends identified were:

  • Nationally, gas prices rose 18 percent from February, and grocery prices are up 10 percent. General inflation in the Knoxville region was 9.1 percent for the March 2021 to March 2022 period. This was an increase of more than 6 percent when compared to March 2020 to March 2021’s inflation rate of 3 percent.
  • Home sales continue to decline. In Knoxville, sales decreased by 7.7 percent in March, while in Knox County sales decreased by 9.7 percent when compared to the previous month. Compared to last year, sales in Knoxville decreased by 2.1 percent, while Knox County sales decreased by 15.1 percent. Sales across the South and nationally are seeing similar declines.
  • The median home sales price in Knoxville was $310,000 in March and $327,450 in Knox County. Both areas saw significant increases in price, up 21.6 percent and 26.6 percent respectively. Around 43 percent of homes sold for over asking price.
  • Inventory in Knoxville is down 1 percent compared to last year but is down 60 percent compared to pre-pandemic levels. In Knox County, housing inventory is down by 22.5 percent compared to last year.
  • The Knoxville MSA collected $101.6 million in state sales tax in March, an increase of 4.1 percent compared to February. Knox County collected $68.3 million, up 7.3 percent compared to last month.
  • March also saw an increase in new business licenses. There were 284 new business licenses issued in Knox County, a 3.3 percent increase from last year.
  • In March, the Metropolitan Knoxville Airport Authority recorded 201,833 passengers. This was an increase of 37.1 percent compared to February, and an increase of nearly 62 percent compared to March 2021. The most encouraging news though, is that the number was only down 1.3 percent compared to pre-COVID March 2019. Nationally, March numbers were still down 12.4 percent when compared to March 2019.

Read the full report here.

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