The Tatum Survey of Business Conditions April 2012
Summary as of April 1, 2012
The U.S. gradual recovery has slowed, but is pushing marginally in a positive direction. All indicators in our Survey are flat or weakly positive when compared to the prior month. Manufacturing remains weak, and healthcare has turned very soft. However, the financial and technology sectors are comparatively strong.
Regionally, the Southwest has consistently been the strongest in recent months, benefitting, we think, from strong oil prices and relatively little damage in Texas from the housing crisis. The Midwest and the Southeast continue to lag.
Despite the on-going progress in overall business activity, hiring continues to lag, due mainly to gains in productivity. However, Capital expenditure commitments are finally rising, as capacity utilization grows.
While keeping a wary eye on international financial, political, and economic threats, our respondents are reporting that the U.S., after three years of massive fiscal and monetary stimuli, seems to be continuing to move in the positive direction of recovery.
Tatum 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 April 1st, the Tatum Index of Business Conditions remained flat with last month’s 5.9. This is well out of the recessionary range. Both the past 30 days and the outlook for the next 60 days were level with the prior month.
Order Backlogs
The percentage of respondents who reported an improvement in orders on hand edged up to 40% from 39% a month ago. The percentage reporting worsened backlogs declined markedly to 8% from 14% last month.
Capital Expenditure Commitments
The percentage of respondents reporting higher commitments to capital expenditures rose to 29% from 24% a month ago. The percentage that committed less on capital equipment increased to 17% from 15%. These two statistics counter- balance each other. We’ll call it flat for the recent history.
Employment
The percentage of respondents hiring more workers rose ever-so-slightly this month to 19% from 17% last month. On the other hand, the percentage that indicated they did less hiring also increased to 11% from 10%. We call this a wash -- flat in the hiring indicator with last month.
Capital Availability and Pricing
The percentage of respondents indicating an improvement in financing conditions rose one tick to 29% from 28% last month. The percentage who indicated conditions were worsening declined to 5% from the 6% reported last month.
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: April 2012 Tatum Survey of Business Conditions
Sam Norwood
Senior Partner
www.TatumLLC.com
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