The Tatum Survey of Business Conditions September 2011
Summary as of September 1, 2011
Business Conditions in the month leading to September 1 turned downward once again after a single upward swing last month. The 60-day forward outlook, however, turned cautiously upward, with a slight increase in the portion of respondents expecting improving conditions and a slight decrease in those expecting worsening conditions. In addition, all the supporting indicators in the outlook were stronger than a month ago when there was significant uncertainty created by the debate to increase the Federal debt ceiling.
Despite the negative turn of the Survey regarding the past 30 days, our respondents seem determined to invest in capital improvements and employees, perhaps in some respect due to improving order backlogs as well as the upcoming holiday season.
Despite the negative turn of the Survey regarding the past 30 days, our respondents seem determined to invest in capital improvements and employees, perhaps in some respect due to improving order backlogs as well as the upcoming holiday season.
Despite the negative turn of the Survey regarding the past 30 days, our respondents seem determined to invest in capital improvements and employees, perhaps in some respect due to improving order backlogs as well as the upcoming holiday season.
Index of Business Conditions
The Tatum Index of Business Conditions is a simple average of the ratio of our respondents who are reporting improvement versus those reporting a worsening in business conditions for the past 30 days and the next 60 days.
As of September 1st, the Tatum Index of Business Conditions decreased slightly to approximately 2.9 from 3.0 a month ago. Last month was the first increase after 5 consecutive months of decline, and now the Index has again turned lower. In a range of 3.0 to 4.0, we have a very high correlation with near zero economic growth and below 3.0 suggests recession in the Tatum Index (the Index was in this range throughout the 2008-2009 recession). Since the end of the recession nearly 2 years ago, the Index has been at or above 3.0, except for the months of September 2010, July 2011 and now September 2011.
{Index of Business Conditions}
Order Backlogs
The percentage of respondents who reported an improvement in backlogs rose slightly to 28% from 27% a month ago. The change came from a decline in those reporting that backlogs stayed the same. The percentage reporting lower backlogs was slightly higher at 18% from 17% last month.
{Order Backlogs}
Capital Expenditure Commitments
The percentage of respondents committing more on capital equipment increased to 21% from 19%. However, the percentage that committed less on capital equipment also increased to 26% from 21%.
{Capital Expenditure Commitments}
Employment
The percentage of respondents hiring more workers increased slightly to 22% from 21%. The percentage that indicated they did less hiring improved to 10% from 13% in the prior month.
{Employment}
Capital Availability and Pricing
The percentage of respondents indicating an improvement in financing conditions declined to 14% from 16%. The percentage who indicated conditions were worsening stayed flat at 16%.
{Capital Availability and Pricing}
We hope you found Tatum's Commentary interesting and useful. We welcome your comments and questions. Click the link below to view the complete report:
September 2011 Tatum Survey of Business Conditions
Sam Norwood, Senior Partner
Glenn Passin, Partner
www.TatumLLC.com
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