The Tatum Survey of Business Conditions March 2013
Summary as of March 1, 2013
As of March 1st, overall conditions have improved. The outlook continues to move upward. While conditions were positive for all indicators in the past 30 days, the 60 day outlook has softened a bit from last month. We think this is due to concerns about the Federal government’s impasse and the potential effects of the “sequester” for capital availability and pricing, and to a lesser extent, employment and cap- ex commitments. We feel that the prior month’s highly positive 60 day outlook was not as influenced by this government concern and, therefore, while the 60 day outlook remains strong, optimism has somewhat waned.
Regionally, the Southeast and Midwest experienced the strongest positive change from the prior month. The Pacific and Southwest were the weakest, relatively, compared to the prior month.
Participants who work with international firms indicated that these organizations were the strongest performers. Participants in regional markets registered the weakest results.
Healthcare firms and manufacturing registered the strongest gains while technology companies were the weakest performers compared to a month ago.
This was a great month for the $100+ million large companies, but small companies in the $5-$20 million range had the weakest results.
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 March 1st, the Tatum Index of Business Conditions improved materially for the third consecutive month after a downward blip in December caused mainly by concerns over the “fiscal cliff.” Discounting December, the trend has been moving upward for five of the past six months, starting in October 2012, now reaching the highest level since February 2011.
Order Backlogs
The percentage of respondents reporting an improvement in orders on hand improved to 37% from 24%. The percentage reporting worsened backlogs increased, somewhat, to 21% from 18%.
Capital Expenditure Commitments
The percentage of respondents reporting higher commitments to capital expenditures rose to 26% from 16%. The percentage committing less to capital equipment declined, moving to 12% from 16%.
Employment
The percentage of respondents hiring more workers increased to 19% from 17% a month ago. The percentage indicating they did less hiring decreased significantly, to 4% from 13%.
Capital Availability and Pricing
The percentage of respondents indicating an improvement in financing conditions declined slightly to 17% from 18%. The percentage indicating conditions were worsening decreased materially to 5% from 11% 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 2013 Tatum Survey of Business Conditions
Sam Norwood
Senior Partner
www.TatumLLC.com
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