The Tatum Survey of Business Conditions March 2012
Summary as of March 1, 2012
The U.S. recovery is back on track following a temporary breather in January. The theme that we see this month is not predominantly more positives but fewer negatives as the recovery broadens.
International transactions have lost some momentum, and manufacturing remains weak. However, the financial and technology sectors are surging, and service businesses are doing better.
Another trend is an overall shift to more positive expectations. This suggests a continuation of near-term overall improvements in business conditions.
Regionally, the Northeast and Pacific states have been the strongest consistently in the past two months. The Mid-west continues to lag despite the recent gains in the automotive industry.
While keeping a wary eye on international financial, political, and economic threats, our respondents are reporting that domestically the U.S., after three years of massive fiscal and monetary stimuli, seems to be continuing to move in the positive direction of recovery.
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 March 1st, the Tatum Index of Business Conditions rose to 5.9 from last month’s 3.5 in the largest one-month gain since February 2011. The survey results continue to be solidly predicting that the economy will NOT be recessionary in the near term. Four of the past 5 months have shown increases in the Index. Both the past 30 days and the outlook for the next 60 days drove the Index higher.
Order Backlogs
The percentage of respondents who reported an improvement in orders on hand jumped to 39% from 32% a month ago. The percentage reporting worsened backlogs declined to 14% from 16% last month.
Capital Expenditure Commitments
The percentage of respondents committing more on capital equipment remained flat at an uninspiring 24%. The percentage that committed less on capital equipment decreased to 15% from 17%. Again, we are seeing flat improvements and yet lower declines, a common theme this month.
Employment
The percentage of respondents hiring more workers fell again this month, to 17% from 20% last month. On the other hand, the percentage that indicated they did less hiring decreased significantly to 10% from 18%.
Capital Availability and Pricing
The percentage of respondents indicating an improvement in financing conditions rose to 28% from 26% last month. The percentage who indicated conditions were worsening remained at 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: March 2012 Tatum Survey of Business Conditions
Sam Norwood
Senior Partner
www.TatumLLC.com
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