The Tatum Survey of Business Conditions January 2013

Sam Norwood

Summary as of January 1, 2012
As of January 1st , overall responses, which were received during year-end governmental negotiations, indicate that we may be out of the worst-case ramifications of falling off the cliff in the near term. While the past 30 days indicated an improvement compared to 30 days prior, the outlook for the next 60 days appears more positive. Business feels that Washington’s actions will relieve some of the anxiety caused by the fiscal cliff, and other economic forces will continue the modest growth trajectory.

In this month’s Survey, the Southwest and Southeast regions reflect the most negative reports, and, emerging from the effects of Hurricane Sandy, the Northeast reflects the most positive.

Respondents who serve regional companies had the best reports and those who work with national companies the least positive.

Capital expenditure commitments were down slightly in December, as spending to take advantage of favorable tax legislation expiring in 2012 has been completed. The outlook for the first 60 days of 2013 appears surprisingly strong considering our belief that some spending accelerated in late 2012 for tax reasons.

Employment plans among our respondents continue to remain flat. We believe this reflects the aforementioned political, spending, and tax uncertainties.

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 January 1st, the Tatum Index of Business Conditions improved materially after a discouraging report a month ago due to concerns regarding Washington’s expected handling of the “fiscal cliff.” This month, both the 30 day retrospective and the 60 day outlook contributed to the upturn. The Index returned to its highest point since June 2012.

Order Backlogs
The percentage of respondents reporting an improvement in orders on hand decreased slightly to 18% from 20%. The percentage reporting worsened backlogs decreased to 18% from 22%.

Capital Expenditure Commitments
The percentage of respondents reporting higher commitments to capital expenditures declined slightly to 29% from 30%. The percentage committing less to capital equipment increased to 24% from 16%.

The percentage of respondents hiring more workers stayed the same at 22% as a month ago. The percentage indicating they did less hiring increased, to 10% from 9%.

Capital Availability and Pricing
The percentage of respondents indicating an improvement in financing conditions increased to 23% from 22%. The percentage indicating conditions were worsening decreased to 9% from 15% 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: January 2013 Tatum Survey of Business Conditions

Sam Norwood 
Senior Partner 

Copyright 2013 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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