The Tatum Survey of Business Conditions December 2013

Sam Norwood

Highlights of the Month:


• It is back to weak growth after a one month positive burst.

• Some production has not sold through and remains in the inventory pipeline.

• Cap-Ex now firm but expected to taper with the New Year.

• Employment on hold; few layoffs, but weak hiring as ACA implementation sputters and causes confusion and uncertainty.

• Interest rate expectations depend on individual views of economic strength; those seeing strong demand expect the Fed to tighten in coming months.

Compared to the prior two months, business conditions are softening. Compared to 12 months ago, business conditions are materially improved.

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 December 1, the Tatum Index slumped to 3.5 from 8.6 a month ago, reflecting a disappointing November and more caution in the next 60-day outlook.

Optimism in our overall participants’ sense of business conditions last month has been significantly tempered. We think it is prudent this month to focus on the average of the past three months (the red line in the following graph) as the most valid expression of current conditions. With the end of the calendar year approaching, the focus turns mainly to retail. The sell-through in November was a bit disappointing, putting a damper on the near-term outlook.

Order Backlogs
The percentage of respondents who indicated improving orders on hand declined to 23% from 33%. Those reporting worsened backlogs grew to 21% from 16%.

Capital Expenditure Commitments
The percentage of respondents reporting higher commitments to capital expenditures increased to 40% from 38%. Further, the percentage committing less to capital equipment also declined, moving to 9% from 10%.

The percentage of respondents hiring more workers slumped to 28% from 38% a month ago. Those indicating they did less hiring rose to 8% from 7%.

Capital Availability and Pricing
The percentage of respondents indicating improved financing conditions rose slightly to 26% from 24%. Those indicating worsening conditions 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: December 2013 Tatum Survey of Business Conditions

Sam Norwood 
Senior Partner 

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