The Tatum Survey of Business Conditions July 2013

Sam Norwood

Highlights of the Month:

• The Tatum Index fell slightly, reflecting declining conditions for the past 30 days partially offset by the future outlook.
• Overall, indicators were flat. Exceptions were in pricing and availability of capital and employment, which were down. The latter’s decline may be mainly seasonal. Cap-ex indicators were upbeat as the result of the favorable economy and typically more summertime projects.
• Local business participants indicated the best results while national results proved to have the weakest.
• Relative strength barely differed across company sizes.

If a “summer slump” develops, it will be mild. Overall, business conditions remain consistent with last month’s, other than seasonal factors. Over the next 60 days, we can expect continued slow growth.

Tatum Index of Business Conditions
The Tatum Index of Business Conditions is a simple average of the ratio of our respondents for the past 30 days and the next 60 days.

As of July 1, the Tatum Index moved down slightly, reflecting a decline in the past 30 days that are offset by positive expectations over the next two months.

The flatness experienced this month still indicates continued growth. Again as in last month, if the data points of the ratio are connected with a straight line mean over the past half-year, business conditions still appear to be continuing toward more solid growth.

For the past three years, we have witnessed a mid-year slump in the Survey results (and later reported in the general economy). This pattern appears to be somewhat muted this year by a more robust economy.

Order Backlogs
In the past 30 days: The percentage of respondents reporting an improvement in orders on hand dropped to 31% from 52%. Those reporting worsened backlogs increased to 16% from 10%.

Capital Expenditure Commitments
The percentage of respondents reporting higher commitments to capital expenditures rose slightly to 42% from 40%. The percentage committing less to capital equipment rose, moving to 11% from 8%.

The percentage of respondents hiring more workers dropped significantly to 34% from 47% a month ago. Those indicating they did less hiring increased to 12% from 3%.

Capital Availability and Pricing
The percentage of respondents indicating improved financing conditions held steady at 30%. Those indicating worsening conditions rose to 10% from 5% 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 2013 Tatum Survey of Business Conditions

 Sam Norwood 
Senior Partner 

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