| Introduction
Tatum conducts a monthly survey of its partners regarding current business and economic conditions. The survey looks back at the past thirty days and forward to the next sixty days. With our partners serving a broad base of industries in every geographic region of the United States, the Tatum Survey of Business Conditions takes a representative pulse of economic activity as of the first day of every month. Results are published the first week of each month at www.TatumLLC.com.
Summary as of May 1, 2008 Business conditions in the month of April were flat with March and February, but the outlook as of May 1 has improved materially. Our survey indicates that the economic deterioration of the past year has bottomed out and that the economy is poised to begin a recovery. The outlook is supported by rising order backlogs and a material improvement in our respondents' answers to the question of the outlook for business conditions.
It now appears that an inflection point was reached around the end of the first quarter. For the near term, while the economy continues to be very weak, we anticipate that the good news will outweigh the bad, and that a gradual recovery will begin to be felt in the second quarter.
Index of Business Conditions
Tatum’s Index of Business Conditions combines elements of the past 30 days and next 60 days into one number, summarizing our view of the current overall trend. The Index rose slightly, being pushed up primarily by the much improved outlook for the next 60 days. The Index is up for the second consecutive month to the highest level since November 2007, and the three-month average of the Index is up for the first time since May 2007. To view the Tatum Index of Business Conditions, please click on {link to Index of Business Conditions}.
Order Backlogs
Order Backlogs are normally the most tangible indication of relative strength or weakness in near-term deliveries of products and services. As of May 1, order backlogs were approximately flat compared to a month ago, but the 60-day outlook improved significantly. For more detail, click on {link to Order Backlogs}.
Capital Expenditure Commitments
Capital Expenditure Commitments are the best indication of the combination of confidence, capacity utilization, opportunities for productivity improvement and financial liquidity. This indicator was statistically unchanged from last month's survey. For more detail, click on {link to Capital Expenditure Commitments}.
Employment
Employment is typically a lagging indicator as businesses, in the face of changing conditions, are reluctant to hire and terminate until the need is obvious and compelling. As of May 1, our survey participants indicated statistically flat employment for both the past thirty days and the next sixty days. For more detail, click on {link to Employment}.
Capital Availability and Pricing
There is little change in the availability and pricing of capital. The 60-day outlook is slightly improved as fears of a melt-down are abated and risk-based lending has been broadly implemented and accepted.For more detail, click on {link to Capital Availability and Pricing}.
Segments, Regions, and Markets
Healthcare rose to the top on the list of strongest performers, displacing service and technology which have been the recent leaders. Real Estate and Construction remain at the bottom. The south western states' business conditions remain more favorable than any other region, while New England continues to suffer the worst conditions. International businesses jumped back to the top as the dollar remained weak through May 1. Large businesses are experiencing better conditions than small ones. More detail can be seen by clicking on the {link to Demographics}.
We hope you found Tatum’s Commentary interesting and useful. We welcome your comments and questions. Click on {link to May 2008 Tatum Survey of Business Conditions} to view a PDF version of the complete PowerPoint report.
Sam Norwood, Senior Partner
Glen Passin, Partner
Any use or reproduction of the contents of this report without the written consent of Tatum, LLC is strictly prohibited. The authors are not engaged in rendering legal, investment or other professional services by publication of this report. Information contained in this report should not be used as a substitute for professional advice, legal, investment or otherwise, on any particular case.
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