The Tatum Survey of Business Conditions November 2010

Sam Norwood

Summary as of November 1, 2010

As of November 1, Business Conditions were continuing to improve very gradually. In the past 30 days, overall conditions improved modestly with significant improvement registered in employment and in the availability of credit. Expectations in the next 60 days showed a slight softening in the overall trend, but there were significant improvements seen in all of the individual supporting indicators. We conclude that conditions are in fact improving, but there is a generalized anxiety related to overall economic and political uncertainties, both domestic and international.

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 November 1 the Index was flat with the prior month and is in a range that is much higher than recession but lower than 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. At November 1, order backlogs were effectively flat with a month ago. The near-term outlook is for modest increases. {
More about Order Backlogs}

Capital Expenditure Commitments
Capital expenditure commitments declined slightly over the last 30 days, but the outlook improved materially. We believe that businesses, while not needing more capacity, are committing more for efficiency-related equipment and systems to extend the productivity gains experienced during the past couple of years and to extend the life of existing equipment. {
More about Capital Expenditure Commitments}

Good news continued on employment, however modest. In the past 30 days the improvement was in the form of fewer layoffs. In the next 60 days our participants are expecting fewer lay-offs plus more hiring. {
More about Employment} 

Capital Availability and Pricing
This is the category of supporting indicators showing the most significant improvement. Now that the U.S. banks have piled up $1 trillion in deposits at the Federal Reserve, we might be seeing the beginning of a thaw in lending, and this could be the fuel to ensure more robust traction in this fragile recovery. {
More about Capital Availability and Pricing}

Segments, Regions, and Markets
The Southeast region was the strongest in the past 30 days. Technology companies returned to the top segment for best business conditions. Mid-sized and regional companies are reporting weakest conditions, perhaps getting squeezed between the more flexible and specialized small companies and the market clout of the larger competitors. {
More about Demographics}

We hope you found Tatum's Commentary interesting and useful. We welcome your comments and questions. Click on {
November 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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