The Tatum Survey of Business Conditions September 2012
Summary as of September 1, 2012
As of September 1, business conditions continued their slide downward but at a slower rate. On the bright side, some improvements are expected in capital expenditure commitments and in the pricing and availability of capital. Broad expectations of coordinated actions by the Fed and Treasury are reflected in this survey.
The West coast is getting slammed according to our respondents. The Pacific region indicated by far the biggest negative change from a month ago, perhaps feeling the effects of the Asian declines in growth.
Employment shows no change from recent months. The overall growth in the economy, if there is any, is simply insufficient to absorb the growing numbers of people looking for work.
The predominant theme among industry segments was an increase in the response “stayed the same.” There are no breakout stars. The financial industry was strongest in our survey.
We see no reason to change our observation from a month ago: Our economy is very near recessionary conditions, and we see no catalyst for turnaround expectations.
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 September 1st, the Tatum Index of Business Conditions continued its decline for the fifth consecutive month. The Index has declined to 1.2, the lowest level since March „09, and within the Index range consistent with recessionary conditions. The 3-month moving average of the Index also declined similarly to the lowest level since May „09.
Order Backlogs
The percentage of respondents who reported an improvement in orders on hand rebounded to 21% from 14% a month ago. The percentage reporting worsened backlogs remained flat at 25%.
Capital Expenditure Commitments
The percentage of respondents reporting higher commitments to capital expenditures declined to 17% from 20% a month ago. The percentage that committed less on capital equipment increased to 23% from 21%.
Employment
The percentage of respondents hiring more workers rose to 28% from 20% last month. The percentage that indicated they did less hiring rose to 16% from 11%.
Capital Availability and Pricing
The percentage of respondents indicating an improvement in financing conditions declined to 12% from 14% a month ago. However, the percentage who indicated conditions were worsening also declined to 3% from 10% 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: September 2012 Tatum Survey of Business Conditions
Sam Norwood
Senior Partner
www.TatumLLC.com
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