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Weekend edition September 23, 2022 | Kailyn Lamb

Knoxville businesses continue to battle inflation in latest “ECO” report

By Kailyn Lamb, Marketing Content Writer and Editor, PYA

Local business sectors continue to fight inflation issues in Knoxville, according to the August edition of the “Economic Conditions Outlook” (ECO) report from the Knoxville Chamber.

The report, financed by First Horizon Bank, showed companies in the manufacturing sector said general business activity was “improved” this month, while their outlooks were split between “improved” and “worsened.” In the July report, businesses were evenly split between “worsened” and “the same” for both general activity and company outlooks. Additional comments from manufacturing businesses said reduced discretionary income is slowing demand for some products.

In the retail sector, businesses said general activity has “worsened” and company outlooks were reported as “the same.” Last month, both were reported as “worsened.” On a positive note, retail businesses have reported that boating sales continue to do well as new people continue to move to the area from other states. Finally, in the service sector, businesses reported both general activity and company outlooks as “the same.” In the July survey, general business activity was reported as “mixed,” and company outlooks were “the same.” Additional comments from the service sector showed that hiring, inflation, and supply chain issues are still a challenge. Some city zoning codes are inhibiting business growth, while inflation is slowing capital investment.

The July unemployment rate in the Knoxville Metropolitan Statistical Area (MSA) was 3.5 percent, down slightly from June. Knox County’s unemployment rate was 3.3 percent, also down slightly from June. In July there were 10,086 unique active job postings in the Knoxville MSA, a decrease of 5.4 percent from June. In Knox County, there were 6,675 unique active job postings, down 4.5 percent from June. Healthcare and retail continue to have the highest number of open positions in the area.

Other important identified trends were:

  • The national inflation rate dipped slightly. The rate from July 2021 to July 2022 was 8.5 percent, compared to 9.1 percent from June 2021 to June 2022. The rate is still considerably higher than the 5.4 percent rate from July 2020 to July 2021. Much of this is due to inflation and high gas prices, according to the “ECO.” Compared to last year, gas prices are up 45 percent.
  • In the Knoxville area, the inflation rate is 9.1 percent for July 2021 to July 2021. This is down slightly from 9.8 percent in June 2021 to June 2022.
  • Home sales in the Knoxville MSA decreased 10.1 percent in July. In Knox County, on the other hand, sales increased 4.6 percent compared to June. Both were down when compared to sales from the previous year.
  • Forty percent of homes sold for over asking price. The median home sales price in the Knoxville MSA was $324,450 in July, an increase of 14 percent compared to last year. In Knox County, the median home sale price was $350,000, an increase of 16 percent compared to one year ago. Inventory continues to increase in the area.
  • In July, the Knoxville MSA collected $125.57 million in state sales tax, a slight increase from June. In Knox County, $80.9 million was collected in state sales tax, down slightly from June. Both areas collected more than 10 percent in sales tax compared to July 2021.
  • In July there were 216 business licenses issued in Knox County, down 23.1 percent compared to last year, and 28 percent compared to pre-pandemic 2019.

Read the full report here.

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