The Tatum Survey of Business Conditions December 2010

Sam Norwood

Summary as of December 1, 2010

As of December 1, Business Conditions reflected a strong improvement over the prior month. In the past 30 days overall conditions improved most notably in Order Backlogs and Capital Expenditure Commitments. Expectations for the next 60 days showed a strong improvement in the overall trend, with significant improvements seen in all of the individual supporting indicators except Employment.

Index of Business Conditions
Tatum’s Index of Business Conditions combines elements of the past 30 days and the next 60 days into one number, summarizing our view of the current overall trend. At December 1 the Index more than doubled from a month earlier and is approaching the more robust recovery months of last winter and early spring. 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. Overall, the backlogs indicator improved for the third consecutive month, a tangible reason to sense that conditions in businesses that have order backlogs are getting better. {
More about Order Backlogs}

Capital Expenditure Commitments
We may be finally reaching a stage in the investment cycle when the cash that has accumulated in corporate coffers is about to be committed to previously deferred maintenance and systems upgrading--if not capacity increases. We may also be seeing more commitments to capital for extensions of the productivity improvements that have been realized during the recession.{
More about Capital Expenditure Commitments}

In spite of the continuing improvement in business conditions, employment remains stubbornly flat. {
More about Employment} 

Capital Availability and Pricing

Optimism from our respondents wavered somewhat in the current month but more are feeling that financing conditions will improve over the next 60 days. Interest rates remain low. U.S. banks have $1 trillion on deposit at the Fed as they have been rebuilding their own capital. Larger businesses are taking advantage of the low rate environment to issue bonds. Corporate liquidity is improving. Smaller, growing businesses have found expansion capital hard to come by, but we might be seeing the beginning of the thaw in lending.
More about Capital Availability and Pricing}

We hope you found Tatum's Commentary interesting and useful. We welcome your comments and questions. Click on {
December 2010 Tatum Survey of Business Conditionsto view the complete report.

Sam Norwood, Senior Partner
Glenn Passin, Partner
Copyright 2010 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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