The Tatum Survey of Business Conditions April 2011

Sam Norwood

Summary as of February 1, 2010

At April 1 our Survey indicated that the economy was continuing its slow recovery at about the same pace as last month, but the concerns are increasing about the near term future. We cannot tell yet whether this is justified collective angst coming from factors such as rising gas prices, Euro-zone sovereign debts, the spreading uncertainties about revolutions in North Africa and the Middle East, state fiscal tensions, and the national budget stand-off, or more tangible indications of reduced vigor coming from customers and industry/regional trends. The downward trends in the index, as well as other indicators, has us watching developments closely. On the bright side, the outlook for employment is positive despite the concerns over external developments.

Index of Business Conditions
Tatum’s Index of Business Conditions is a simple average of the ratio of our respondents who are reporting improvement versus those who are reporting a worsening in business conditions for the past 30 days and the next 60 days. As of April 1st, the Tatum Index of Business Conditions declined approximately 25% to 6.2. This change reflects a negligible 5% improvement in the past 30 days and a significant 32% decline in the outlook. The rations that make up the Index are subject to large percentage movements, but it is clear our respondents are growing more concerned about the near-term future. To view the Tatum Index of Business Conditions, please click on {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. After looking better a month ago, order backlogs are lower both in the past 30 days and in expectations for the next 60 days. This supports the softer outlook overall. {More about Order Backlogs}

Capital Expenditure Commitments
Capital expenditure commitments are made based on decisions of one or more months in the past. In the past 30 days, commitments softened. However, the outlook has turned into a mix that we interpret to be flat. We see this mix in other indicators as well, suggesting greater differentiation in outlooks in different industries and markets. That is, the recovery is less evenly distributed. {More about Capital Expenditure Commitments}

This mixed picture for employment shows rising new hires, and this is a refreshing indication following a number of months in which the best news was reductions in layoffs. We interpret this as an improvement in the employment situation overall. {More about Employment}

Capital Availability and Pricing
We are seeing that fewer respondents are seeing conditions getting better, bust as the same time, fewer are seeing financing conditions getting worse. We interpret this as a stabilization in financing conditions, without a distinct trend. {More about Capital Availability and Pricing}

We hope you found Tatum's Commentary interesting and useful. We welcome your comments and questions. Click on {March 2011 Tatum Survey of Business Conditions} to view the complete report.

Sam Norwood, Senior Partner
Glenn Passin, Partner
Copyright 2011 Tatum, LLC All Rights Reserved.

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 issue.

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