The Tatum Survey of Business Conditions July 2012
Summary as of July 1, 2012
The news is more bad than good as our Tatum Survey respondents report on conditions as of July 1. While there was a slight uptick in those reporting better conditions in the last 30 days, for the most part our respondents are not optimistic. As they look out towards the next 60 days, the majority are taking a “wait and see” attitude. They are increasing their cap ex spending a little, but keeping a tight lid on hiring.
Backlogs presented a conflicting story, with some reporting an improvement and expectations of continuing improvement, while others saw declines and expect more declines.
The general takeaway is that the economy is bumping along in a weakened state without a strong catalyst for change.
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 July 1st, the Tatum Index of Business Conditions continued its decline. The 3-month moving average of the Index also declined.
Order Backlogs
The percentage of respondents who reported an improvement in orders on hand jumped to 40% from 26% a month ago. The percentage reporting worsened backlogs also jumped, to 22% from 16%, last month.
Capital Expenditure Commitments
The percentage of respondents reporting higher commitments to capital expenditures increased to meaningfully 26% from 18% a month ago. The percentage that committed less on capital equipment increased to 18% from 15%.
Employment
The percentage of respondents hiring more workers rose slightly to 18% from 17% last month. The percentage that indicated they did less hiring jumped to 15% from 9%.
Capital Availability and Pricing
The percentage of respondents indicating an improvement in financing conditions stayed flat at 21%. However, the percentage who indicated conditions were worsening rose materially to 17% 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: July 2012 Tatum Survey of Business Conditions
Sam Norwood
Senior Partner
www.TatumLLC.com
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