The Tatum Survey of Business Conditions December 2012
Summary as of November 1, 2012
As of December 1st, overall responses indicate that we may be heading into a difficult period. While the past 30 days indicated little or flat growth, the outlook for the 60 days ahead appears rocky as business awaits Washington’s post-election reaction to correcting the course of the deficit and resolving the fiscal cliff impasse.
In this month’s Survey, the Southwest region reflects the most negative reports and the Midwest the most positive.
Asian and European economies continue to have a drag on the businesses of participants who work with international companies.
Capital expenditure commitments seem to have leveled out now, as spending to take advantage of favorable tax legislation expiring in 2012 has been completed. The outlook for 2013 appears somewhat pessimistic.
Employment plans among our respondents remain flat. We believe this reflects the aforementioned, political, spending and tax uncertainties as well as international economic concerns.
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 December 1st, the Tatum Index of Business Conditions turned negative after two consecutive encouraging months. Both the 30 day retrospective and the 60 day outlook contributed to the negative turn. However, the increase in the number of respondents expecting a worsening in conditions in the next 60 days was especially harmful to the Index.
Order Backlogs
The percentage of respondents reporting an improvement in orders on hand improved slightly to 20% from 17%. The percentage reporting worsened backlogs also increased slightly to 22% from 20%.
Capital Expenditure Commitments
The percentage of respondents reporting higher commitments to capital expenditures rose slightly to 30% from 28%. The percentage committing less to capital equipment declined to 16% from 19%.
Employment
The percentage of respondents hiring more workers declined to 22% from 29% a month ago. The percentage indicating they did less hiring also declined, to 9% from 17%.
Capital Availability and Pricing
The percentage of respondents indicating an improvement in financing conditions increased to 22% from 13%. Also, the percentage indicating conditions were worsening rose, to 15% 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: December 2012 Tatum Survey of Business Conditions
Sam Norwood
Senior Partner
www.TatumLLC.com
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