The Tatum Survey of Business Conditions April 2013
Highlights as of April 1, 2013
Results:
- The six-month upward climb in improving business conditions has stalled, however, the 60-day outlook is positive and the three-month trend continues upward.
- Outlooks for Capital Expenditure Commitments as well as Capital Availability and Pricing surged in a positive direction – two major developments. Clearly, the banks seem more ready to lend and companies are preparing to spend on capital improvements.
Conclusion:
- The economy continues to improve, and the coming months could see a further acceleration.
NOTE TO READERS:
In the past two months, the Tatum Index registered a exaggerated leap at March 1 and an exaggerated decline at April 1. This is an unusual phenomenon that occurred as a result of data set aberrations detailed within the report. In this circumstance, we focus on the 3-month trend (currently positive) and the supporting detail indicators (mostly positive).
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 1, the Tatum Index registered a steep decline following the prior month’s steep rise. These wide swings exaggerate the reality of magnitude of change due to statistical aberrations that occur when there are small numerical changes in low-number percentages, e.g., a 3 percentage point change from 6% to 9% is a 50% change, while a 3 percentage point change from 12% to15% is a 25% change. This is a time to focus on the three-month trend, which is continuing upward.
Order Backlogs
The percentage of respondents reporting an improvement in orders on hand improved to 41% from 37%. The percentage reporting worsened backlogs declined to 16% from 21%.
Capital Expenditure Commitments
The percentage of respondents reporting higher commitments to capital expenditures rose to 31% from 26%. The percentage committing less to capital equipment also rose, moving to 15% from 12%.
Employment
The percentage of respondents hiring more workers increased to 24% from 19% a month ago. However, the percentage indicating they did less hiring rose to 9% from 4%.
Capital Availability and Pricing
The percentage of respondents indicating an improvement in financing conditions doubled to 34% from 17%. The percentage indicating conditions were worsening increased slightly to 7% from 5% 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 2013 Tatum Survey of Business Conditions
Sam Norwood
Senior Partner
www.TatumLLC.com
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